BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/14
The government intervened with a variety of measures last year to prop up the real estate market, including a reduction in the downpayment requirements. Downpayment requirements have been further lowered this year in most cities, as well as certain taxes related to apartment purchases have been reduced. Shanghai and Shenzhen, however, in an effort to dampen the rise in apartment prices, have tightened rules on apartment buyers and raised the downpayment requirements. The revival of the housing market partly reflects the increased use of borrowed money to meet the downpayment requirement. Downpayment loans are provided e.g. by some housing developers or through a peer-to-peer lender.
Living costs in China’s large cities have also risen rapidly. The latest survey of 133 cities of the Economist Intelligence Unit (EIU), found that all the eight cities in mainland China included (Beijing, Dalian, Guangzhou, Qingdao, Shanghai, Shenzhen, Suzhou and Tianjin) were among the world’s 60 most expensive cities. The EIU survey looks at prices of over 160 goods and services. Living costs are measured in relation to New York, so the dollar’s appreciation lifted US and Chinese cities in the rankings. The highest living costs were in Singapore, Hong Kong and Zürich. Shanghai was the priciest Chinese city, sharing 11th place with Tokyo. Shenzhen ranked 16th, making it slightly more expensive than Helsinki (17th).
Trends in Chinese apartment prices (98-city survey)
Sources: SouFun, Macrobond