Home owners get the jitters

• Source: Global Times
• [10:49 June 18 2010]
• Comments

By Zhou Mi

The number of secondhand residences on sale in Shanghai increased by 10 percent to 127,723 in the first two weeks of June, which according to analysts is a result of central government restrictions on house buying and growing nervousness over a forthcoming local property tax.

"This is the outcome of the recent restrictive policy on house purchases by the central government, while the forthcoming Shanghai property tax has aggravated the situation," Lu Qilin, an analyst from Shanghai-based real estate consulting firm YouWin Estate Research Center, told the Global Times Thursday. "Many homeowners are facing difficulties paying their mortgages, and are not optimistic about future house prices, so more are opting to sell."

Rumors that Shanghai was planning to introduce a tax on property sales were confirmed on May 14 by Shanghai's Deputy Mayor, Tu Guangshao.

According to data from Centaline Property Shanghai, the largest real estate agency in the city by market share, the price of Shanghai's secondhand residences dropped by 2.5 percent in May compared to April.

"This shows the game between the buy side and sell side is still going on," said Lu. "The future depends on what price buyers are willing to pay." He predicted that, if the current macroeconomic situation remains unchanged, prices will drop by 10 to 20 percent by the end of the year.

China's central government issued a series of housing policies in mid-April, which included the tightening of mortgage restrictions for buyers of second and subsequent homes and increasing the down payment requirement from 40 to 50 percent, in a move to cool the overheated housing market.