Shanghai Considering Curtailing Loans For Luxury
Apartments
In order to cool down Shanghai real estate prices, the
Bank of China is considering curtailing loans for luxury
apartments in Shanghai. The move is considered a necessary
drastic measure to force the market to cool down.
In the past year, new apartments have trended towards
larger sizes for luxury apartments. Previously, large
luxury apartments were considered to be in the 500 - 600
square meter range; now they have gone up to the 1,000
square meter size. The average price of these apartments
are now in the 5 million yuan range (US$600,000). In some
cases, prices have gone up from 7,000 yuan per square
meter to more than 13,000 yuan in less than two years.
While these prices are far beyond the range of the average
Shanghai salary earner, the banks have offered loans so
that buyers can afford them. The new moves to limit loans
to these new buyers are aimed at cooling off demand for
development of these new luxury apartments. The Bank of
China has been at the forefront of these new loan cutbacks.
These new regulations will be aimed at cutting back on
price, size and accessories in order to meet loan requirements.
The aim of the new measures is to encourage development
and purchase of smaller efficiency apartments. The size
of these apartments would be about 160 square meters,
and would cost about 5,000 yuan per square meter. Most
of these new developments would be apart from downtown
Shanghai in the newly developed Shanghai suburbs.
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