New realty curbs put in place by Shanghai municipal authorities earlier this month have taken some prospective home buyers in the city off-guard.
Among the many cases is that of a factory owner from the neighboring Anhui province who was about to ink a deal for a luxury apartment in a riverside highrise near the city’s Bund area. According to the China Securities Journal, the person was forced to cancel the deal so abruptly that he might not get his advance deposit back.
Home buyers from other parts of the country that do not have the Shanghai “hukou”, or household registration, are no longer eligible to own a home in the city unless they have made continual contributions to Shanghai’s social security fund for a minimum period of two years, according to the municipal government’s recent new seven-point policy package.
Property brokerage Century 21 Real Estate has seen its branches in Shanghai record several deal cancellations and a surge of disputes in the past week, the Securities Journal notes. Impact of the “two-year fund contribution” requirement for non-local home buyers can be devastating, given the fact that such people have accounted for a bulk of home sales in Shanghai in recent years. In 2012, for instance, non-locals made up more than 40 percent of the city’s housing transactions.
Meanwhile, a rule requiring 70 percent minimum down-payment for second-home buyers has also dented buyers’ enthusiasm.
An agent at Centaline Property told the Journal that one of his clients had to abandon a deal for a 4.2 million yuan duplex flat and look for cheaper alternatives as the client could not cover the shortfall following the new down-payment rule.
Some prospective home owners have also opted to stay on the sidelines as their outlook on the market’s prospects has changed. Some of them who had earlier been deeply anxious about further price surges have now begun to take the view that the city’s runaway home prices may be near an inflection point, Shanghai-based Xinmin Evening News notes.
Meanwhile, the Shanghai Municipal Housing, Land and Resources Administration has made it clear that land supply for residential housing will be increased by 30 percent, totaling at least 1,000 hectares (10 million square meters), by the year end.
Shanghai-based property consultancy E-House China Holdings Ltd (EJ.US) estimates that overall transaction volume in November will be down 30 percent compared to the previous month, and that the December figure could be even worse.
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