Buyers' despair as house prices start to rise
By Cherry Cao | 2012-9-12 | NEWSPAPER EDITION
Sep 12, 2012
PEGGY Huang began her search for a compact two-bedroom apartment near to her son's primary school in Shanghai's Xuhui District in June.
But when classes started this month, she was still searching.
She had been expecting to find something she could afford before her six-year-old boy began first grade.
The new apartment was for her parents, so they could be close at hand to help get her son to school and back every day while she and her husband were at work.
Huang is looking for an apartment of around 70 square meters, and one with an elevator instead of the six flights of stairs her parents currently have to navigate in their old apartment block in Hongkou District.
For the past week, Huang and her husband have been leaving their home in outlying Minhang District before 7:15am so they can get their son to his new school on time.
"I've looked at more than a dozen apartments over the past three months, but I still find myself stuck in the middle of nowhere," said Huang, an administration manager at a state-owned company.
"The homes I saw either lacked exposure to the sun or were too close to major highways. Worse, quite a few homeowners started to talk about higher prices when we showed initial interest."
Her despair is not unlike that experienced by many people who had thought the time was finally ripe to re-enter the housing market.
The supply of existing homes is pretty tight, and home prices are starting to creep up after stabilizing or even dropping.
Sales of existing homes in Shanghai last month tumbled 15.5 percent to 17,800 units, the first drop in four months, Century 21 China Real Estate said in a report last week. The homes were sold at an average price of 17,000 yuan (US$2,681) per square meter, up 3.4 percent from July.
"Fewer homes were released to the market last month, with a number of areas recording a decrease of between 10 and 30 percent in terms of new supply," said Qiu Dan, a Century 21 researcher.
Reducing discounts
"Recovering home-buying sentiment since May, both in existing and new home markets, has boosted the confidence of individual sellers, who have been reducing discounts or even raising their prices."
Six of nine areas in the city, including Tonghe in Baoshan District, Lianyang in the Pudong New Area and Xinzhuang in Minhang District, saw average prices rise by between 5 and 10 percent in August from a month earlier, Century 21 research showed.
Sales of existing homes started rising in May, hitting 21,100 units in July, the first time transaction volume had exceeded 20,000 since February 2011.
Prices that month climbed an average 4.9 percent from June to 16,454 yuan per square meter, with up to 30 percent of the projects tracked by Century 21 showing price increases.
A separate report by Shanghai Centaline Property Consultants Ltd showed that the values of existing homes for sale in August gained 1.4 percent from July to 17,470 yuan per square meter, amid a double-digit drop in volume.
"Compared with outlying districts, downtown areas registered particularly sluggish momentum in August, with notable declines in both the number of home-viewing trips as well as inquiries from potential buyers," said Song Huiyong, research director at Shanghai Centaline.
"However," he said, "home prices continued to head north across the city."
Shanghai's existing housing index, which tracks price variations of previously occupied homes in the city, rose 0.8 percent in August from July, after fractional gains in July and June.
The city's existing home market will likely remain "stagnant" for another few months, with flat volumes and firm prices, industry analysts predicted.
"The property market will continue to be policy-driven," said Gong Min, research manager at Shanghai Centaline.
