Shanghai's residential property market has registered positive changes over the past month as tightening measures to cool overheated sentiment started to take effect, the city’s housing authority said last night.

“Irrational sentiment among buyers has been curbed, and the latest rein-in measures introduced by the government on March 25 have been regarded by the general public as effective to damp interest of both investors and speculators, as well as to prevent housing prices from rising too fast,” the city’s housing and urban-rural development administration said.

Home seekers are now taking their time or simply choosing to sit on the sideline for a while before entering a deal while real estate developers are adopting a more active approach in releasing homes to the market for sale instead of deliberately holding them back for higher prices.

Between March 25 and Sunday, the area of new homes sold in Shanghai totaled 1.2 million square meters, down 43 percent from the period between February 25 and March 24, statistics showed. In the pre-owned market, 2.1 million square meters of houses changed hands across the city during the monthlong period ended on Sunday, a plunge of 58 percent.

The new and pre-owned homes sold in the city over the past month cost 32,406 yuan (US$4,992) per square meter and 26,814 yuan per square meter, respectively, down 4.8 percent and 0.4 percent, respectively, compared with the monthlong period prior to the implementation of tightening measures.

Around 8.99 million square meters of new homes were available for sale in Shanghai as of Sunday, compared with an inventory of 8.16 million square meters recorded on March 25.

Shanghai unveiled measures a month ago that mainly include increased down payment for second-home buyers and raised threshold for non-local buyers to buy a home in the city.

Buyers of second homes now have to pay a minimum 70 percent down payment if the property is defined as a “non-normal” home, and a minimum 50 percent if the house is “normal.” Previously, a 40 percent deposit was required for both types of house. Moreover, home buyers seeking bank loans for a second home after paying off the mortgage on their first home are now considered second-home buyers. Previously, the buyers were viewed as first-time buyers at commercial banks.

The new measures also allow non-local residents to now qualify to buy a house if they can provide tax or social insurance certificates confirming that they have stayed in the city for more than five consecutive years. Previously, they would be entitled to buy a home after staying 24 months accumulated over a three-year period.

As a result of the changes, 89 percent of home mortgage applications received by commercial banks since the implementation of the new measures are defined as first-time buyers, down from 97 percent before the measures were imposed. The deposit buyers of second homes are paying has also been raised to around 60 percent on average.

Also, the proportion of non-local buyers applying for home mortgages have fallen sharply to 11 percent, according to the administration’s statistics.

(Source: ShanghaiDaily  Author: Cherry Cao)