A potential homebuyer checks realty brochures at a property expo in Shanghai. Provided to China Daily
Shanghai authorities are planning to discuss measures to cool property prices, including introducing stricter policies on financing for both homebuyers and developers, Bloomberg News reported on Thursday.
Regulators may discuss pushing up down payments from the current 30 percent to 50 percent for first-time homebuyers, and to 70 percent for buyers who have taken out mortgages, the report said.
The city's housing and construction authorities declined to comment on the report, but analysts said that it is likely that measures to curb property and land prices will be introduced in Shanghai, after neighboring cities such as Nanjing in Jiangsu province introduced limits on land auction prices. However, they said that the details of these measures remained under discussion.
In March, the Shanghai government tightened its approval criteria for nonresident homebuyers, by increasing down payment requirements for some purchases of second homes and banned unregulated lending for homebuying, after soaring prices fueled a buying frenzy.
Sales volumes fell in April and May, in response to the tightening policies, but rebounded in June as buying sentiment recovered.
Average transaction prices continued to increase, rising by 2.7 percent quarter-on-quarter to 35,500 yuan ($5,530) per square meter in the second quarter, according to Savills East China research.
"A strong residential sales market has encouraged developers to bid aggressively for new residential land plots, pushing land prices and premiums to new heights and fostering the expectation of further residential price growth as developers push costs on to eventual homebuyers," said James Macdonald, a Savills Research analyst, in a recent residential property report.
On Aug 18 and 22, auctions for four land parcels in Shanghai were suspended, which was interpreted by market players as a signal that the authorities are unwilling to see land prices surge too fast within a limited time after Shanghai saw a handful of cases in which developers offered record prices for land parcels, with a retail price of more than 100,000 yuan per square meter anticipated for the most expensive ones.
"Developers buying land at such high prices means residential prices will surge even higher in the future. As a result, the authorities may introduce measures to curb land prices and limit home price growth," said Zhang Hongwei, an analyst with Shanghai Tongce Real Estate Consultancy Ltd.
