Price hikes draw ire of home buyers
Those looking to buy their first homes say the reduction of the deed tax has spurred home owners to raise property prices
Property owners in Shanghai have been raising the selling price of their homes to take advantage of the current supply shortage in the secondary market as well as the new government policy that has reduced trading tax for firsttime buyers.
China’s Ministry of Finance had on Feb 22 halved the deed tax across all Chinese cities from 3 percent to 1.5 percent and some home buyers lament that the move has been the primary cause of the price hikes. The asking prices of nearly half of the apartments available for sale have grown by 3 to 5 percent, according to data by property consultancy Centaline.
Lu Wenxi, a senior research manager from Centaline Shanghai, was faced with such a scenario when he was looking for a home. Lu said that the landlord of a twobedroom apartment in Xuhui district had demanded for an additional 200,000 yuan ($30,608) the moment interest was shown.
“I simply lost interest in the house and decided to look for others. Price hikes are very common now,” said 35-year-old. week-long Chinese New Year holiday. The 102-square meter unit was initially priced at 4.3 million yuan before the festive period.
According to Jiang Yizhen, a store manager with Centaline in Shanghai, this owner had raised the price every time a potential buyer agreed to go through with the transaction. The 16-year-old apartment, now valued at 5 million yuan by the owner, is still on the market.
“This is an extreme case because the apartment has been very popular among buyers thanks to its special condition and good location,” said Jiang.
Shanghai traded the world’s largest volume of homes in 2015. Some 49.86 million square meters of residential properties worth more than 1.4 trillion yuan were traded in the first and secondary markets, according to Ding Zuyu, executive president of E-House (China) Holdings Ltd.
However, a report from Citic Securities has urged investors to exercise caution as it questioned whether there is enough support for the property market to continue its rise. The report added that the market sentiment could cool down if the expected cut on interest rate is not implemented this year.
Demand for luxury homes is on the rise, too. The 352 highend apartments in the city’s downtown Hongkou district were sold out in a day on Feb 21, generating a total sales revenue of 3.6 billion yuan, according to China Business News.
“It is a Chinese tradition to buy a home either for better living conditions or as a safe investment solution,” said Lu.
“It is a good deal to pay more money to buy an apartment in one of the nation’s first-tier cities, where one can have access to better education, medical services and job opportunities.”