Tight policies chill Shanghai luxury home trading

The central government's tight grip on house mortgages and purchase limits led to a chill in Shanghai's luxury property trading compared with Hong Kong and Taipei, a report said on Monday.

"The limited supply of financing and rigid requirements for mortgages cooled down the trading of luxury homes in Shanghai," said Lyrics Xuan, associated director of project sales and marketing in Shanghai with Colliers International. "However, due to the limited supply of high-end property, prices are quite stable in mature areas as well as in the secondary market."

In August, 326 luxury homes, representing 68,281 square meters of floor space, were traded at an average price of 57,475 yuan ($9,100) per sq m in Shanghai, a report on luxury housing issued by the real estate service provider Colliers International said.

Residential property was traded at an average price of 22,703 yuan per sq m in August in Shanghai, down 8 percent month-on-month.

In contrast with Shanghai, the market for luxury property in Hong Kong and Taipei is more active.

Hong Kong is the most sophisticated luxury housing market among the three cities. Local high-end property prices are at about 170,000 yuan per sq m with properties favored by the rich from Hong Kong, the mainland and abroad, which helps to support prices.

In the second quarter, about 30 percent of Hong Kong's luxury homes were bought by the wealthy from the mainland, said Doris Lam, director of investment services at Colliers International.

Over the past five years, luxury property prices in Taipei surged between 60 and 70 percent, with low mortgage interest rates between 2 percent and 2.7 percent boosting the market, the report said.

About 58 percent of Chinese wealthy buy a luxury property for their own use, but 73 percent believe that a luxury property has better investment returns than a common residential property, a separate report showed.

The authors of the report interviewed 340 luxury property owners across the nation, with a majority of them holding assets worth more than 10 million yuan.

Analysts said that it wasn't a coincidence that the two reports on the luxury property market were published at around the same time.

With no signs of a relaxation on housing purchase limits in major cities, there are rising calls for a different treatment of luxury properties.

"Having a high-end residential property, a villa, a winter house in Sanya (Hainan province) and a summer home on Lushan Mountain (in Jiangxi province) has become a new lifestyle choice for China's most wealthy people," said Chen Sheng, vice-president of the China Real Estate Data Academy.