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

China Daily (Canada) - - SHANGHAI - By WANG YING in Shang­hai

wang_y­ing@chi­nadaily. com.cn

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.”

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