Shanghai seeks balanced development of housing ownership, leasing biz

Shanghai's latest initiative to ensure the supply of government-subsidized rental housing through acquiring pre-owned homes is expected to better address diverse leasing demand in the market and effectively support the balanced development of housing ownership and leasing, said experts in response to the move.

On Monday, the first batch of such projects was officially launched at a signing ceremony in Shanghai, with local governments of Jing'an district, Xuhui district and Pudong New Area piloting the initiative separately, reported local news portal Shanghai Observer.

"By bridging pre-owned homes and rental housing, the policy can effectively help reduce the stock of existing homes that are less competitive due to age, size and condition," said Yan Yuejin, deputy head of the Shanghai-based E-House China R&D Institute.

"In addition, transactions of existing homes will speed up these owners' moves to buy new apartments. As a result, the inventory of new homes in the market can also see easing," Yan said.

According to the plan, apartments of a suitable size with reasonable designs in established communities — and enjoying convenient transportation resources — will be purchased by district governments. These flats will then accurately match the leasing needs of new residents, young people and university graduates, among other demographics, Securities Times reported.

Pudong New Area, for example, looks to focus on acquiring privately owned flats located within the Inner Ring Road area, built before 2000, under 70 square meters and priced below 4 million yuan ($580,000). As for Jing'an district, secondhand apartments with moderate prices will be preferred. Meanwhile, Xuhui district is exploring small apartments on the market via the district's affordable housing developers, and the flats will be decorated and equipped using unified standards after acquisition.

"China Construction Bank's financial support in the first batch of government subsidized housing purchases would effectively ensure the supply of such rental housing, lowering young people's living costs, in a bid to attract more talent to settle down," said Zhang Wenjing, general manager of the Shanghai data division with the China Index Academy.

"In the meantime, government purchases of existing homes would help stabilize pre-owned housing market transactions and prices, and better balance supply and demand. Furthermore, the new measures are expected to ease inventory pressure, drive new home sales, and support the balanced development of ownership and rental housing," Zhang said.

The municipal government of Shanghai announced on Friday it would extend the trial measures of collecting property taxes from eligible individuals, according to a notice published on the official website of the Shanghai Municipal Bureau of Finance.

"After assessing the city's trial policies on levying real estate taxes, the municipal government has decided to continue to execute the policy until Jan 27, 2031," said the notice.

Shanghai and Chongqing became the only two cities on the Chinese mainland to levy property taxes in 2011.

In Shanghai, such taxes are only collected from families having housing areas of more than 60 square meters per person, which will be taxed at a rate of 0.4 percent or 0.6 percent of the total property price annually, depending on the apartment's price per square meter.