China's "property bubble" is alive and well. Even as new home prices in Shanghai declined 5.7% last week, home sales have spiked. Property developers' margins are certainly high enough so that they can offer discounts in order to increase volumes.
Shanghai Daily: Over the last seven days the sales of new homes, excluding government-funded affordable housing, surged 68.3 percent from the previous week to 140,400 square meters, according to a report by Shanghai Deovolente Realty Co.A rumor has been widely circulated recently that the authorities will permit people who do not have a permanent residence but have lived in the city for three years to purchase a second property. Many non-residents went shopping.
Property Wire: China’s financial centre Shanghai has eased home purchase restrictions to allow a broader pool of buyers to purchase a second property.But today it seems the authorities have either denied or backed away from this policy. This is quite telling, as it may indicate the central government's concern about a renewal of the property bubble. With signs of property markets heating up again, the policy my now be shifting away from easing existing curbs on home purchases. Liquidity remains high, while investment opportunities outside of the property markets are quite limited, particularly given current inflation levels. Many who "missed the bottom" in 2008 are now looking to buy in fear of missing the "bottom" again. Even the Beijing market is picking up.
The city has decided to allow residence permit holders who have lived in the city for at least three years to buy a second home, according to a source at the city’s housing regulator.
It previously limited the second home option to locals, or those born in the city or who worked for an extended period of time and were officially recognised as locals, without specifying guidelines for non locals.
China Daily: According to industry watchers, the property market has been warming up. Property sales in Beijing and Shanghai, for instance, both rebounded last week. In Beijing, 2,186 new and second-hand apartments were sold last week, up 30.2 percent week-on-week, according to the municipal government.