House prices rise despite controls

The Shanghai property fair held last weekend, attracted 65 thousand visitors. In contrast to previous property fairs in March, this fair saw more deals signed as people lose hope that prices may drop. The fair made record sales.

Many property agents put up slogans boasting 1 million yuan for a downtown apartment. But visitors soon found out these kind of apartments are in small and old buildings. The price per square meter is not cheap.

Real estate agent said, "Houses downtown are sold at more than 20 thousand yuan per square meter."

Shanghai resident said, "Properties costing 1 million yuan only account for 10 percent of the total available. Properties sell at over 2 million yuan on average."

Despite a series of macro control policies issued recently by the government, house prices are still rising.

The Ministry of land and resources has ordered 78 state owned enterprises to exit the real estate market. Another regulation requires property developers to pay 20 percent capital guarantee in advance and make a 50 percent down payment within one month when acquiring new land. But those measures have made many developers hold back their houses from sale.

Real estate analyst, said, "Property developers still have enough capital, so they do not want to slash prices. They cannot get new land, so they hold back from selling their houses."

To curb speculation, the government has issued policies that raise the down payment ratio. The first home 30 percent discount on the loan interest rate has also been cancelled.

Shanghai resident said, "The cancelation of the 30 percent discount on house loan interest does not affect rich people. They do borrow money anyway."

Real estate agent said, "Real estate is a value maintaining industry. It can counteract inflation."

Statistics show that in the first quarter of this year, house supply for new homes in Shanghai was 1.3 million square meters, down 16 percent from last year. For pre-owned homes it's 4.2 million square meters, that's down 60 percent from last year。