New measures to boost housing market

A slew of measures announced by the central and municipal governments may boost housing sales in the coming months, according to pundits.

On April 9, the city government raised the cap for housing fund loans by as much as 50 percent, which means that an individual in Shanghai can now borrow as much as 600,000 yuan ($96,600) from housing fund loans to buy a home, while a family of two can borrow up to twice as much.

In China, housing fund loans are designed to help medium- and low-income workers buy a home as they carry lower interest rates than regular mortgages.

The new measure in Shanghai comes after the central government announced a series of policies on March 30 to perk up the property market, including tax deductions and lower down payments for home buyers.

The move comes after Premier Li Keqiang sent a message during this year's National People's Congress (NPC) that property market policies were to be, in a way, liberalized.

"The new policies will greatly support the property market, especially when the macro-economy is following a downward trend," said Ding Zuyu, executive president of E-House (China) Holdings Ltd.

Shanghai's property market may bottom out and stabilize this year, Ding added.

Sales of residential properties in the city climbed 4.95 percent in the week starting April 6 from the previous week, according to data compiled by China Real Estate Index System (CREIS), a real estate research institute.

Over the same period, new homes with a combined total area of 219,000 square meters were sold in Shanghai, up 6.6 percent, according to Shanghai Centaline Property Consultants.

But only 6,324 lived-in homes changed hands over the same week, marking a fall of 14.5 percent, according to public information.

"Tax cuts are less attractive for those buying homes on the secondary market, because many homeowners raise their asking prices right after new policies are issued," said Ira Xu, a logistics manager with a Hong Kong-listed company.

Xu, a 38-year-old Shanghai native, is about to buy a three-bedroom apartment in suburban Qingpu district under the new policies.

"My parents and I live in a 70-square-meter apartment downtown in Changning district, but the new policies will allow me to buy a second home in a suburban area with a lower down payment," Xu said.

The new policies may spur transactions in the housing market, said Huang Zhijian, executive director at Shanghai Uwin Real Estate Information Services Co.

Huang said the market should not be liberalized too quickly in first-tier cities like Shanghai because "once the restrictions are removed, speculators will enter the market along with those who are genuinely looking for homes, which could cripple the government's efforts to tame rampant home prices".

"The latest move is sending a strong signal to the market that the regulators themselves desire a stabilized housing market," JLL, an international real estate consultancy, wrote in a recent report.

Joe Zhou, head of research for JLL East China, said that market conditions vary substantially from city to city.

"Most tier-two and tier-three cities are still facing high inventories and large supply pipelines; while in tier-one and tier-1.5 cities, market fundamentals look much healthier, and the loosening measures are very likely to lead to an upward trend in housing prices," he said.

wang_ying@chinadaily.com.cn