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Buying house in Shanghai Series: II

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First a little background. Like the Chinese stock market, the Chinese real estate market has a brief history and I talked it a bit in my previous E-House post. Also, China is a big country and the real estate market varies by region, for instance, the Shenzhen market is cooling down lately while Shanghai market is becoming hot. Very much like in the US we could see Dallas and Seattle are still doing ok, while California, Las Vegas etc. are cooling down now.


The picture above is taked from Vanke White Horse Garden in Shanghai (courstey of, for more pics click here).

With that in mind, I am talking about my understanding the Shanghai housing market, in Q&A style.

1) Why the price went up so much lately?
It’s mostly supply and demand. The new supply is very limited in 2005 and 2006 because: the prevailing prices did not spur interest from developers to build new homes; the new supply of land is very limited.

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Another ditch to cool housing market

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It’s not the last ditch, but the goverment (China bank regulation commision, or CBRC) is raising the down payment for 2nd or 3rd time home buyers. They will need to put down 40% or higher (compared to 30% in the past). Obvioulsy we can understand the good intention of the goverment policy: contain the speculation in the housing martket. More importantly, I believe this move is to help the banks control the risks in the home loans. After all, most banks in China are owned by the goverment; and housing loans made up a large percent of bank lending and bottom line (profit). Nobody wants to see a “US subprime style” crisis in China. But can the housing market really be regulated? Or can this new policy be implemented to all the stake holders’ satisfication?

(The following is some home listings at a broker near Zhongshan Park. Full size pic can be seen here).

Shanghai home listing pic

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