Shanghai Mayor rules out easing control on home prices
February 5, 2019 Category China News Round-up, Weekly
Shanghai Mayor Ying Yong said that he will do everything in his power to stabilize the housing market, ending speculation that the city would loosen its grip on the sector as it faced an uphill task of sustaining growth amid fears of a slowing economy. “We must bear in mind that controlling prices of land and homes is not a makeshift policy,” the Mayor told a press conference after the close of the annual session of the Shanghai People’s Congress. “We will stand firm in stabilizing the property market and ensure reasonable pricing on land and homes so that the price movements will be in line with our expectations.” Shanghai has set a economic growth target of 6% to 6.5% in 2019, down from last year’s 6.5%. It is expected to be the slowest growth since 1990 when the city’s gross domestic product (GDP) expanded 3.5%.
Property used to be a key driver for China’s urban areas and local governments would roll out incentives to bolster construction and stimulate home purchases to underpin economies when there were signs of a slowdown. Real estate investment in Shanghai climbed 4.6% in 2018, compared to a growth of 17.7% in the manufacturing sector during the same period. “Shanghai’s home prices are still not affordable to talented professionals from other parts of the country,” said Yin Ran, a Shanghai-based angel investor and independent analyst. “The weak home market at present is not enough to prompt local officials to ease the austerity measures.” Home prices in Shanghai surged between mid-2015 and late 2016, forcing the municipal government to step in to roll out measures to stem the gains amid fears of a property bubble.
In March 2016, Shanghai raised mortgage down payments, heightened the threshold for non-locals to buy homes and tightened oversight of the shadow banking system to rein in the overheated property market. Prices of pre-owned homes in Shanghai were estimated to have dropped about 10% in 2018. Some southern cities such as Zhuhai and Guangzhou, along with Heze in Shandong province, pioneered the move to loosen curbs in late December amid slowing sales and a bearish outlook in China’s property market, but similar measures are not expected to be rolled out in Shanghai, the South China Morning Post reports.
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