Sales of existing homes plunge 24% in August as govt policies hit demand
Shanghai's sales of existing homes plunged in August as recent tightening policies discouraged on buyers.
About 18,000 lived-in homes changed hands last month, a drop of 24 percent from July and a year-on-year dive of 40 percent, Shanghai Homelink Real Estate Agency said in its monthly report on Monday.
Homes worth a total of 57.4 billion yuan (US$8.9 billion) were sold, a fall of 30 percent from a month earlier and a plunge of 44 percent from the same period a year ago.
Homes sold for an average 3.18 million yuan, down 7 percent from July.
"Sales fell for the second consecutive month, with volume falling to the average pre-pandemic level, indicating the end of a buying spree that lasted for more than half a year," said Yang Yulei, a senior analyst with Homelink.
"The decrease in transaction volume has proved that rein-in measures to cool down the overheated market are very effective."
In early July, the Shanghai Housing Administration Bureau ordered the list price of every pre-owned home be verified by the local industry watchdog based on the normal range, and those that fail to pass the verification will not be allowed to be publicly listed for sale, a move Yang said would "effectively lower home seekers' expectations on property prices."
Less than a month later, the lived-in housing market was hit with another heavy blow when banks were told to approve mortgage loans based on the lowest of three prices: the contract price, the price assessed by the bank, and the price verified by the real estate transaction center – which is often much lower than the other two prices.
"With this policy in place, home buyers now need to set aside a significantly increased amount of money for downpayment," Yang said.
"Consequently, many home-seekers were forced to cut their budget and turn to less expensive lived-in units or simply quit their plans to buy property."
Property viewing trips handled by Homelink fell 5 percent in August, the third consecutive month of weakness amid generally dampened sentiment among home buyers.
Huinan in the Pudong New Area, Nanqiao in Fengxian District and Jinshan New Town were the most sought-after locations last month, with sales of 663, 516 and 452 homes respectively, according to Homelink.
In the first eight months of 2021, about 222,000 existing homes, with a total value of 745.1 billion yuan, were sold, up 31 percent and 36 percent from same period a year ago.
The average price was 3.36 million yuan, an increase of 4 percent year on year.
A separate report released earlier by Shanghai Centaline Property showed that new home sales, excluding government-subsidized affordable housing, rose 11.8 percent from July to 897,000 square meters in August despite a drop in new supply.
About 267,000 million square meters of new residential properties were rolled out into the market, a plunge of 77.2 percent from the previous month.