The price of a shorter com­mute De­mand for new apart­ments stays bullish

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

Shang­hai res­i­dents spend an aver­age of 50 min­utes ev­ery day trav­el­ing around 19 kilo­me­ters to and from work, and those look­ing to shorten this dis­tance by one metro sta­tion will have to fork out more to find a home, ac­cord­ing to the lat­est re­port re­leased by Cen­taline Shang­hai.

By track­ing pas­sen­ger traffi in the city’s cen­tral busi­ness dis­tricts dur­ing the morn­ing rush hours (7 am to 9 am), Cen­taline Shang­hai’s re­search dis­cov­ered that there is a close link be­tween home prices and the num­ber of pas­sen­gers at sub­way sta­tions. More specif­i­cally, the lower the hous­ing prices in an area, the higher the hu­man traf­fic in the metro sta­tions lo­cated in these places.

Based on these find­ings, the prop­erty agency de­ter­mined that peo­ple would have to pay about 211,700 yuan ($30,682) more for an 86-square-me­ter home that is lo­cated one metro stop nearer to their of­fices.

In spite of three rounds of tight­en­ing mea­sures in March, Oc­to­ber and Novem­ber last year, Shang­hai’s res­i­den­tial prop­erty mar­ket was still a hive of ac­tiv­ity, with 179,000 units of newly built prop­er­ties be­ing traded, up 9.9 per­cent year-on-year, said Liu Tianyang, gen­eral man­ager of Cen­taline Shang­hai and the vi­cepres­i­dent of the com­pany’s Chi­nese main­land op­er­a­tions. The to­tal value of these prop­er­ties amounted to 727.9 bil­lion yuan, a 19.2 per­cent an­nual in­crease.

In the sec­ondary prop­erty mar­ket, 371,000 units were sold for 917.1 bil­lion yuan, up 1.74 per­cent and 19.27 per­cent re­spec­tively, while the aver­age price of a unit had soared 18 per­cent to 2.4 mil­lion yuan.

How­ever, Liu ex­pects home prices to sta­bi­lize through­out 2017 be­cause of the raft of cool­ing mea­sures.

Shih Wing Ching, chair­man and CEO of Cen­taline Group, ex­pects the over­all trade vol­ume this year to de­cline from one-third to half as the gov­ern­ment con­tin­ues its ef­forts to re­duce the in­flu­ence that prop­erty in­vestors have on the mar­ket.

In a bid to make prop­er­ties more ac­ces­si­ble to cit­i­zens who need a home in­stead of those merely look­ing to in­vest, the Chi­nese gov­ern­ment has since Sept 30, 2016, in­tro­duced more than 50 prop­erty mea­sures in over 26 cities across the na­tion. It has also built 3.66 mil­lion res­i­den­tial units un­der the ur­ban low-in­come hous­ing project in the first half of 2016, achiev­ing 97.7 per­cent of the an­nual tar­get.

Dur­ing the 2016 Cen­tral Eco­nomic Work Con­fer­ence in De­cem­ber, of­fi­cials pro­posed us­ing fi­nan­cial, land, fis­cal, in­vest­ment and leg­isla­tive mea­sures to curb the real es­tate bub­ble. They also called for the in­tro­duc­tion of a sys­tem and long-term mech­a­nism that can pre­vent se­vere price fluc­tu­a­tion in the sec­tor.

“The real es­tate mar­ket played a vi­tal role dur­ing China’s eco­nomic de­vel­op­ment. But af­ter decades of de­vel­op­ment, the prop­erty in­dus­try has now ap­peared to bub­ble and the large amount of so­cial cap­i­tal in­vest­ment in prop­erty de­vel­op­ment in sec­ond- and third-tier cities has caused a strain on in­ven­tory,” said Shih.

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