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