[photopress:real_estate_Shanghai.jpg,full,alignright]According to statistics from Savills Property Shanghai average Shanghai property prices have risen 5.7% in the first nine months this year. But they may be beginning to meet buyer resistance.
The reason is the government raised mortgage deposits from 30% to 40% and increased the interest rate to 1.1 times the benchmark lending rate for second-home buyers. That’s an interest rate of 8.6% for a 10-year mortgage.
Second-home buyers on an RMB 1 million apartment will have to pay an extra RMB100,000 for a mortgage deposit and RMB62,274 more for a 15-year loan.
Gao Shugui, a sales manager at Centaline China Property said, ‘Buyers are struggling to get big enough loans because banks are taking a conservative approach to property appraisals. In many cases properties are valued at less than the sale price.’
This tough attitude by the banks is a good thing in that if it is assiduously followed China will have no sub-prime drama such as has hit the United States.
The slight slump in demand is prompting owners to lower prices. According to statistics from Midland Holdings, around 80% of owners had lowered prices in Shanghai as at October 10. Of the price drops, 75% were reduced to within 5%, 3% were cut by 6 to 10% and 2% fell by 10%.
Feng Hongrui, general manager of Midland Holdings in Shanghai said, ‘Some real estate investors are selling their holdings because they’re worried the government will launch further tightening policies.’ However, the generally expressed feeling is the market will stay calm until details of the new property policy are released.
Source: China Daily