Cracking down on speculation in Shanghai property market

On the evening of January 21, the Shanghai Municipal Housing and Urban Rural Development Management Commission, together with the Shanghai Municipal Housing Administration and other eight departments, issued the “opinions on promoting the steady and healthy development of the city’s real estate market” (hereinafter referred to as the “opinions”), with a total of 10 articles, involving land, purchase restrictions, credit, new house lottery, taxes and other contents, fully reflecting the guidance of Shanghai’s stable housing prices and stable expectations.


Analysts pointed out that in Shanghai, the property market has been more active recently, and some illegal behaviors have emerged, so we should resolutely fight against the “false fire” in the property market. The new policy comprehensively reduces the opportunities for speculative buyers to enter the real estate market and increases the cost of entering the market by means of “combination fist”; at the same time, the preferential policy of lottery to “families without housing” has maximally protected the right of just needed citizens to buy housing. It is expected that the timely introduction of policies will promote the stable mentality of home buyers.


The following is an article by article interpretation of the key contents of the Shanghai property market new deal.


The “opinions” mentioned that the land market management should be improved. Optimize the structure of land supply, increase the supply of commercial housing land, especially in the suburbs around rail transit stations, five new towns (Nanhui, Songjiang, Jiading, Qingpu, Fengxian new town) to increase the supply. We should adhere to the real estate linkage mechanism, guide enterprises to acquire land rationally, and stabilize land prices.


Interpretation: increasing land supply can really ease the contradiction between supply and demand.


Yan Yuejin, research director of the think tank center of E-House Research Institute, said that three points have been emphasized in improving land market management. First, the land supply should be increased and the structure should be adjusted, which is more in line with the characteristics of the current housing demand in Shanghai and can really ease the contradiction between supply and demand. Second, the policy makes clear the adjustment of land supply in the regional market, especially the land supply along the rail transit line and the five new towns, which is conducive to the increase of such regional housing projects and the settlement of personnel housing. Third, the policy also mentioned the stability of land prices, emphasizing the persistence of the real estate linkage mechanism, which is also to prevent the land price rise from transmitting to the house price.


A person from the investment and Development Department of listed real estate enterprises said that they are still optimistic about the Shanghai market and are looking forward to more high-quality land in Shanghai. The company has informed us to focus on the land promotion plan of Shanghai around suburban rail transit stations in the future, strengthen research and judgment, and strive to get more suitable land.


The opinions mentioned that the housing purchase restriction policy should be strictly implemented. In case of divorce, if either party purchases commercial housing within 3 years from the date of divorce, the number of housing units owned by the couple shall be calculated according to the total number of housing units of the family before divorce.


Interpretation: this policy is a “patching” policy, strictly block fake divorce to buy a house.


Zhang Bo, President of the branch of anjuke Real Estate Research Institute, said that this policy will have a direct deterrent effect on some people who want to obtain the house purchase qualification through fake divorce and the first set of qualification through fake divorce. The tightening message is very clear.


Yan Yuejin also said that this policy has cracked down on the phenomenon of false divorce to defraud the house purchase qualification. Now even if the divorce, then the last three years also have an impact on the purchase. Relatively speaking, Shanghai’s policy is stricter.


The “opinions” pointed out that the number of VAT years should be adjusted. The period of value-added tax exemption for individual housing sales will be increased from 2 years to 5 years.

Cracking down on speculation in Shanghai property market

Interpretation: according to the previous regulations, when purchasing the first flat of ordinary residence for 2 years, it is exempt from value-added tax and surcharges, but according to the new deal, it can only be exempted from value-added tax after 5 years.


Lu Wenxi, an analyst of Shanghai Zhongyuan Real estate market, said that due to the short-term formation of speculation atmosphere in the market, especially the new heat, there is also a price difference in the transfer of new houses. Increase the exemption period of value-added tax from 2 years to 5 years, that is, increase the exemption period of value-added tax and increase the cost of speculation. These combos are aimed at cracking down on speculation in real estate.


A real estate enterprise marketer pointed out that the purchase of real estate, decoration and occupancy itself is a long process, and the five-year restriction period is reasonable, which increases the cost of short-term turnover, while not limiting the replacement demand of just needed.


Another person from the top 10 real estate enterprises also said that the policy of directly restricting the transfer of houses within five years to be fully taxed directly refers to the real estate speculation. Increasing the tax on the transaction link can effectively reduce the demand for new investment and, to a certain extent, limit the liquidity of second-hand houses. The supply of new houses in Shanghai in 2021 is expected to be strengthened.


“Opinions” clearly, strictly implement the differentiated housing credit policy. We should implement the concentration management of real estate loans, strengthen the prudent management of individual housing loans, guide commercial banks to strictly control the pace and growth of individual housing loans, and prevent sudden lending. We should guide commercial banks to further strengthen the management of loan verification, and strengthen the verification of the source of down payment funds and debt income ratio of house buyers. Strictly prevent credit loans, consumer loans, business loans and other funds from illegally flowing into the real estate market.


Interpretation: increasing the review of the source of down payment funds of house buyers will effectively solve some illegal cash out behaviors in the current market.


A real estate enterprise marketer told the surging news that some home buyers used the low cost of capital such as consumer loans and operating loans to buy houses illegally, which promoted the “hot” of new house recognition to a certain extent. The behavior of strict investigation will restrain the behavior of using low-cost funds to earn the price difference quickly.


“Opinions” put forward strict management of commercial housing sales. Strict record management of new commercial housing sales plan. Strictly implement the management system of “one price clear” and “real name system” for commercial housing sales. We will improve the system of notarized house selection for newly-built commercial housing, and give priority to meeting the demand of “families without houses” for home purchase. Strengthen the supervision of pre-sale funds to protect the legitimate rights and interests of buyers.


Interpretation: standardize the sales of new houses, and guarantee the legitimate demand of rigid demand for houses.


Lu Wenxi pointed out that we should improve the system of notarized house selection for newly-built commercial housing, and give priority to meeting the demand of “families without houses” for self occupied house purchase. This measure protects the rights and interests of just need buyers to the maximum extent.


Zhang Bo mentioned that the sales management of commercial housing, including one house with one price, publicity and filing, had done a good job before Shanghai. This time, he put forward the requirement of “one price clearing” and prevented real estate enterprises from improperly increasing illegal fees in decoration, parking space and other aspects. At the same time, the requirement of “real name system” can effectively prevent the speculation of purchase qualification and improper transfer of profits.


The above top 10 real estate enterprises also pointed out that the article aims to regulate the sales of new houses. Due to the strict price limit system for new houses implemented in Shanghai in recent two years to ensure the stability of house prices, the phenomenon of upside down of first-hand and second-hand houses in some sectors does exist, and a few new houses have violations in the sales process. The phenomenon of private collection of “tea fee” and internal illegal operation has increased. It is expected that this level will be improved The intensity of strict control will be further strengthened, and the intensity and scope of investigation and punishment will be significantly improved.


“Opinion” also mentioned that strictly regulate the real estate market order. Strengthen the supervision of real estate development enterprises, sales agents and real estate brokerage agencies, and carry out special rectification work on the order of the real estate market. We will intensify joint efforts to rectify and enforce the law, form a joint force to enforce the law, and seriously investigate and deal with illegal activities such as hoarding, price violations, false advertising, artificially creating a tense market atmosphere, and inducing and evading regulatory policies.

Cracking down on speculation in Shanghai property market

Interpretation: standardize the operation order of the real estate market and avoid artificially creating market tension.


Lu Wenxi pointed out that inflammatory propaganda such as real estate agents also boosted the market transaction fever, and it is expected that after strengthening the control, the agitation will cool down.


In addition, the policy also mentioned that we should adhere to both rent and purchase, speed up the transformation of old districts, and strengthen policy publicity. The Shanghai municipal Party committee and the Shanghai municipal government said that they have always attached great importance to the well-being of the people’s livelihood in housing, resolutely implemented the main responsibility of the city, based on the livability of the general public, planned the housing development in the 14th five year plan as a whole, promoted the steady and healthy development of the real estate market, increased the effective supply of rental housing, improved the long-term rental housing policy, and stabilized the supply Affordable housing, multi-channel to meet the living needs of the public; and through speeding up the transformation of old areas, urban village transformation, existing multi-storey housing with elevators and the construction of beautiful homes in residential areas and other ways to improve the living quality of the public.

One thought on “Cracking down on speculation in Shanghai property market

  • The principle of giving priority to the consumption of citizens and the housing of ordinary commodities has met the needs of consumption, regulated investment and restrained speculation. The speculation and speculation in the real estate market in Shanghai has been basically curbed and the market order has become more standardized

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