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Mainland banks in Shanghai's red-hot housing market lent 99.58 billion yuan (RM48.67 billion) in new mortgages last year, up dramatically from 5.8 billion yuan in 2008, as home seekers rushed to buy and prices hit new highs.
The banks lent 38.93 billion yuan to buyers of new residential properties and 60.65 billion yuan to buyers of second-hand homes, the Shanghai office of the People's Bank of China said yesterday.
Lending soared more than 1,600% compared with 2008, when the property market and overall economy were hit hard by the global financial crisis, the central bank said.
Analysts said the sharp increase in the city was in line with the national surge in home mortgages.
"At the end of 2009, outstanding medium- and long-term consumer loans (nationwide) stood at 4.9 trillion yuan, an increase of 1.588 trillion yuan from the end of the previous year," Xavier Wong, the director and head of research of property consultancy Knight Frank's Greater China division, said. "In 2008, outstanding medium- and long-term consumer loans increased by only 345 billion yuan. Housing mortgage loans account for about 99% of medium- and long-term consumer loans in China."
The increase was helped by lower tax charges and looser credit policies introduced by the central and local governments in late 2008, he said.
In November, the average price of new homes in urban Shanghai was 31,209 yuan per square metre, up 68% from 2008, Knight Frank said.
Nationwide, prices in many cities rose more than 40%, Wong said.
Looking ahead, he said, some uncertainties hung over the market, which was facing continued growth in liquidity but also suffering from tightening administrative measures.
Liao Qun, a senior vice-president and chief economist at Citic Ka Wah Bank, expects mortgage loan growth in Shanghai and the country as a whole to slow in the first half as the property market slows amid the austerity measures. But prices and sales volume would pick up in the second half owing to strong demand, he said.
In order to pre-empt surging residential prices from creating a property bubble, the central government issued directives early last month intended to curb speculation in the residential market.
Among these were a resumption of the 5.5% business tax on second homes bought and sold within five years. The lock-up period had been reduced to two years last year to shore up the market during the financial crisis.
On Dec 31, the Shanghai government announced related measures. It further tightened criteria for concessions on deed taxes and individual income taxes and made mortgage terms more stringent for buying a second property.
Property consultancy Colliers International says the residential market probably faces a moderate correction, with price re-alignment in different districts in the short term, but Colliers does not expect a sharp correction.
Given the government's pledge to maintain the continuity and stability of economic policies, Colliers does not expect widespread policy reversals adverse to the property market this year, it says in a research report.
Taking into account a continuation of the government's "moderately loose" monetary policy, Colliers says the residential market is not expected to experience a sharp relapse this year. — South China Morning Post
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