Shanghai Existing Home Sales Fell 22% in April Amid Credit Clampdown

Sales of existing homes in Shanghai fell by almost one-fourth last month as the Chinese government continues to clamp down on sales of pricey housing in an effort to keep residential real estate prices steady.

The city saw some 13,550 second-hand home transactions in April, which was 22 percent lower than in March and a fall of nine percent from the same period last year. The small quantity of turnover made this the slowest April in six years for previously owned housing sales in China’s commercial hub, according to the Shanghai Existing House Index Office which tracks home transactions in 130 areas across the city.

Pre-used home prices, meanwhile, fell for a fifth straight month in April — declining by 0.43 percent from March.

In its statement, the Existing House Index Office noted that, “As the major banks have raised mortgage interest rates and strictly enforced restrictions on purchases of additional homes, the growth of new demand has slowed down. During April, the Shanghai branch of the China Banking and Insurance Regulatory Commission (CBIRC) sent teams to inspect commercial banks in the city in week-long visits to pore through records related to loans seen as high risk, and also to sniff out diversion of consumer credit for home purchases, according to a recent report by Reuters.

The drop in existing home transactions was also tied to price controls imposed on sales of new homes. As developers that do not follow pricing guidance set by the local government will not be issued presale permits, the prices of new homes diverged with those of pre-occupied homes, said the office.

Government Says Purchase Restrictions Here to Stay

Just this week, officials from the Ministry of Housing and Urban and Rural Development reiterated that the ministry will not change or loosen price control policies designed to prevent speculative investment in the property market, according to official news agency Xinhua.

The housing authority said it would “adopt effective measures to stabilise home prices and rents.” The government would also increase land supply, the officials added.

Shenzhen And Beijing See Growth

China’s home purchase restrictions appear to be keeping a tighter lid on the Shanghai market this month than in the nation’s other first-tier cities, other major metro areas saw moderate month-on-month transaction volume growth in April.

Beijing’s volume of second-hand home transactions rose 22.6 percent in April compared to March, reaching their highest level in a year. Prices in the nation’s capital rose by 0.3 percent from the previous month, and had dropped 18.2 percent from their highest point in April last year, Xinhua said.

Southern first-tier city Shenzhen also saw an increase in the number of second-hand property transactions last month. The city recorded 4.89 percent more transactions in April compared to the month before, although transaction volumes were down 6.41 percent year-on-year, according to official media People.cn.