One sector that seems well under control, however, is Shanghai's housing market, where regulation has taken a somewhat personal turn.
The Shanghai bureau of the China Banking Regulatory Commission says it will scrutinize mortgage loan applications by recently divorced couples to ensure that they are not faking their break-ups just to buy an additional apartment. The recently implemented housing sales restrictions are alarming real estate agencies and property developers. Chen Tong reports.
This real estate agency in Shanghai's downtown Jingan used to be one of the company's best-performing branches in term of sales volume. But since Shanghai launched a new series of housing policies last month, almost none of the staff bothers to come to the office.
"Some 50 to 70 percent fewer clients are coming to see apartments. There are fewer apartments on the market and recent policies have made it harder for some would-be buyers. So people are not coming. "said Yu Jiajun, Deputy Branch Manager of Centaline Property.
After implementing a series of policies to regulate the market, the Shanghai government is in addition now scrutinizing loan applications -- divorced couples are not allowed to make joint payments on a housing loan.
"Banning ex-couples from repaying a loan together is a way to avoid property speculation. I think it makes sense, the sales volume was pretty good in the past and it is decreasing. Some who wanted to buy additional apartments are not allowed to do so now because of this policy change. It's all in line with market expectations, however. But basically I don't think the declining sales volume means it will be a free fall." said Yan Yuejin, Research Director of Ehouse Real Estate Research Institute.
The new restrictions have also cracked down on the business of property developers. Shanghai has not seen any new housing units coming on line for three consecutive weeks. The city's average selling price was around 43,800 yuan per square meter last week, a decline of five percent week-on-week.
Yan Yuejin said "The declining number of new housing units is a choice made by the developers but guided by the government's policies. And the decline in new units will lead a decrease in sales volume. Now most of the trade is in inventory and previously owned apartments. The acceleration in the launch of new units will probably take place in the first half next year. We will likely to see a market rebound then."
The official October housing data will be released next Friday. Yan says he still expects an increase in housing prices nationwide, but the rises will be subdued.
