Shanghai Real Estate Sales Plunge in September 2007

Real Estate transaction volumes of both new and second-hand homes shrank significantly in the city over the past month, major real estate agencies said.

“October is the fourth consecutive month that witnessed a drop in transaction volume of new homes,” said Xue Jianxiong, head of research at Shanghai Youwin Real Estate Information Service Co Ltd. “A somewhat overdrawn purchasing power in the first half of this year, the recently announced new mortgage policy as well as an insufficient market supply might have jointly contributed to the decrease.”

A total of 1.62 million square meters of new residential properties were sold in the city between October 1 and October 30, a decrease of 22 percent from September, according to Youwin.

That was less than half the turnover in June when 3.5 million square meters of new homes were purchased.

The People’s Bank of China and the China Banking Regulatory Commission announced on September 27th that mortgage holders who apply for another home loan will be required to produce a down payment of at least 40 percent and pay a 10 percent premium on their interest rate.

Meanwhile, statistics from leading real estate agency Centaline showed transaction of used apartments fell by about 30 percent in the city in October, or a drop of 50 percent from same period a year earlier.

Earlier media reports said the local supply of new residential properties dropped below six million square meters on October 9, its lowest level since the second half of 2005, citing the official Shanghai Real Estate Trading Center Website.

Only about 5.76 million square meters of new homes were available for sale at that time while industry sources generally agree that a supply of some 10 million square meters is “normal” for the city.

However, the average housing price for new homes rose last month, mainly because more high-end apartments and villas — which usually cost more than 30,000 yuan per square meter — were sold during the period.

According to Youwin, new homes sold at an average price of 11,577 yuan (US$1,543) a square meter in October, an increase of 10.18 percent from a month ago.

Housing sales plunge in September
by Cao Qian | Shanghai Daily