Shanghai has taken further steps to cool its overheating housing market. Last week, the city announced tougher restrictions on housing sales, and plans to increase the percentage of down payments for residential apartments.
With immediate effect first-time home buyers will have to pay a minimum 35 percent down payment, up from only 30 percent previously. The term “first-time home buyer” only refers to those who has not own any home in the city and have never applied for any mortgage loans. Those that sells their first home and plans to buy another one is considered a second-home buyer and purchase down payment of 50 or 70 percent applis to the new property depending on its value and location.
Real estate agencies were surprised by the new restrictions. Staff at this real state agency in Shanghai’s downtown Jing’an district were busy studying the new policies and many say the tougher restrictions will have a big impact on them because most of their clients are second-time buyers.
“In a long run, housing prices still need to be controlled. The apartment stock in cities like Shanghai is not enough now, so we do need purchasing restrictions to adjust the relationship between supply and demand. It’s coming to the end of the year, so local governments are under pressure to control housing prices. Appropriate restrictions are needed to stabilize market expectations and prevent speculation,” said Yan Yuejin, research director of E-house Research Institute.