Mar 29, 2016

On 25 March 2016, Shanghai’s Ministry of Housing and Urban-Rural Development (MOHURD), along with other three government agencies announced nine policies to further reinforce control of the city’s real estate market, effective immediately. This followed a joint announcement of a change in the tax structure for many industries, including real estate, announced the previous day.

Policy highlights:

Tightens home purchase qualifications for non-local home buyers
The new policy raises the qualifications for non-local home buyers. Such buyers must now show proof of payment of taxes or social insurance for five consecutive years. Under the previous policy, buyers were required to show proof for two of the previous three years.

Figure 1 Changes to Minimum Payment Period for Taxation or Social Insurance

Previous Policy

New Policy

Two of the previous three years

Five consecutive years

Source: Government agencies, 2016

Tightens housing loan policies for second home buyers
The new rules raise the minimum down payment for second homes from 40% to 50% or 70%. For “ordinary homes ” using commercial loans, the minimum down payment has been raised to 50%. For “non-ordinary homes” using commercial loans, the minimum down payment is now 70%.

Figure 2 Changes to Down Payment Policy for Second Homes

Previous Policy

New Policy

Minimum Down Payment For Ordinary Homes Using Commercial Loan:



Minimum Down Payment For Non-Ordinary Homes Using Commercial Loan:


Source: Government agencies, 2016


Spike in home prices in the last 12 months amidst strong sentiment
Purchase sentiment in Shanghai’s commodity residential property market in recent quarters was at the strongest level since 2009. As of the end of February 2016, Shanghai’s new home sales surged by 87.7% YOY. The average sales price grew as well, up by 24.6% YOY, due to an increase in transactions of high-end projects and price rises at new phases of desirable projects.

Figure 3 Shanghai New Commodity Residential Market Transacted Area and Average Price

Source: Research, Colliers International Shanghai, 2016

Colliers’ view:

The new policies are expected to cool the market by limiting demand. This policy move will also strike a note of caution for prospective speculators.

However, demand for Shanghai‘s residential market will remain high, as many local first-home buyers will not be affected by the new policies. A short-term correction may be expected but price growth will continue in the medium to long term.

Colliers International has made its best efforts to interpret the above new policy but accepts no liability for any error, omission, inaccuracy, misinterpretation or misunderstanding created by the above comments. If any discrepancies exit, the original Chinese version issued by the central government should prevail.

For further information, please contact:

Carlby Xie
Director | Research
+86 21 6141 3688

Lina Wong
Managing Director
East & Southwest China
Investment Services | China
+86 21 6141 3600

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