Some people in Shanghai directly raise the price of second-hand houses by 300,000 yuan, while others wait quietly for the stock market to rise and push up house prices

In the past few days, three groups of home buyers have successively made appointments to negotiate with Ms. Lan, a Shanghai landlord, face-to-face on October 7th. This time, her asking price has increased from 2.2 million yuan to 2.5 million yuan.

"They took the initiative to make appointments with me!" On October 4th, Ms. Lan told the reporter of "National Business Daily" that just half a month ago, there were buyers who approached Ms. Lan through an intermediary to negotiate the price, asking if she would sell for 2.1 million yuan. At that time, Ms. Lan found it unacceptable and even hesitated about whether to sell early.

After the new policy was introduced, the enthusiasm of home buyers was reignited. Although Ms. Lan has expressed her willingness to raise the price, the number of calls to make appointments to view the house has increased significantly.

Editor's note: On September 29th, Shanghai issued seven real estate loosening policies. Among them, non-Shanghai residents buying homes outside the outer ring road need to have a social security or individual income tax payment history of "3 years reduced to 1 year"; the minimum down payment ratio for the second home is 20%; and the VAT exemption period is changed from "5 years to 2 years".

Raising the price by 300,000 yuan, leaving a safety cushion

As soon as the "Shanghai Seven Policies" were announced, news of soaring prices for second-hand houses flooded various social media platforms.

A senior intermediary in Yangpu District, Shanghai, named Liu Yi, told the reporter of National Business Daily: "A house in the outer ring area was previously listed at 4.55 million yuan, but after the new policy, it increased to 5.2 million yuan. This house has not been owned for 5 years yet. According to the old rules, around 5% of the value-added tax should be paid, which is usually borne by the buyer. Now, more than 200,000 yuan in value-added tax has been saved, which is a good thing." "But with the house price suddenly rising by 650,000 yuan, the cost for the buyer has not decreased but increased. Who would be willing to take over?" he said.

Liu Yi revealed that some individual landlords in prime locations also raised prices just to join in the trend. For example, a house that was previously listed at 5.6 million yuan actually had a psychological price of 5 million yuan, but had no takers. Now, the base price has been raised to 5.5 million yuan.

Some landlords have their own considerations for raising prices. "At 2.5 million yuan, after negotiating it might drop to 2.4 million yuan, and after another negotiation, it might be 2.3 million yuan." Ms. Lan stated that she also wants to leave a safety cushion for herself.

Senior second-hand house transaction broker Li Xiaoyi analyzed to the reporter of National Business Daily: "For second-hand houses, there are some advantages in the outer areas, with a 3-year reduction in social security requirements to 1 year, but the effect is limited. Based on past experience, most home buyers already have a Shanghai hukou, and some have been working in Shanghai for many years, qualifying to buy a house. The reduction in social security requirements will not add much purchasing power."

"Stock market needs to rise a bit more for house prices to be pushed up"

However, some landlords remain calm.

Several landlords who are currently listing their houses for sale told the reporter of National Business Daily:

"If we don't raise the price, there are very few viewers, and the house won't sell."

"We need the stock market to rise a bit more before house prices are pushed up."

Taking Pudong New Area as an example, the reporter of National Business Daily saw on the Beike app that discounted listings still account for a high proportion in various major areas. For example, as of the end of September, there were 985 discounted listings and only 59 increased price listings in the Beicai area in the south of Pudong, with an average listing price decrease of 11.1% over the past year; in the Jinqiao area in the northeast, there were 813 discounted listings and only 56 increased price listings, with an average listing price decrease of 12.2% In multiple areas such as Xuhui District Botanical Garden, Tianlin, where a large proportion of "old and dilapidated" properties are located, there are indeed a certain number of properties with price increases, but generally they do not exceed 10% of the total properties.

In fact, whether actively "trading volume for price" or waiting for a price surge to sell, the Shanghai market had anticipated the new policies long ago. Starting from setting the tone of "stabilizing after a decline", the transaction volume of second-hand houses has seen a significant increase, reaching 872 units on September 28th, a rare high point in over two months.

Due to the new policies being implemented just one working day before the National Day holiday, the enthusiasm for property purchases was dampened by holiday travels. According to a report from Shanghai Online Real Estate, the transaction volume of second-hand houses in Shanghai significantly decreased during the holiday period, with recent daily transactions around 170 units.

Analysis from Shanghai E-House Real Estate Research Institute pointed out that currently, there is a lack of consensus on transaction prices between buyers and sellers. It is common for buyers to negotiate prices at a 10% discount, and even 20% discounts are not uncommon, as cases of price negotiations reaching a stalemate are quite common. After the new policies, both buyers and sellers can save a lot of costs in the transaction process, benefiting from the price losses on the property, which can be compensated during the transaction, making negotiations much smoother.

Regarding the "deeply discounted" old and dilapidated properties in this round of price adjustments, the E-House Research Institute believes that after nearly three years of price adjustments, the rental income of "old and dilapidated" properties will significantly exceed deposit interest.

"Looking at the top 10 active blocks with the highest proportion of 'old and dilapidated' properties in Shanghai, the average rental-to-sale ratio of 'old and dilapidated' properties in 2024 is 2%. The Pudong Expo block has the highest rental-to-sale ratio, reaching 2.4%; Putuo Caoyang block, Ganquan Yichuan and Guangxin blocks, as well as Jing'an Pengpu block, all have rental-to-sale ratios exceeding 2%." E-House pointed out, "As China enters an interest rate reduction cycle, with deposit interest rates successively lowered in December 2023 and July 2024, the current highest yield for a 5-year fixed deposit rate is only 1.80%. With a decrease followed by an increase, the motivation for landlords to sell will also significantly decrease."

Author: Bao Jingjing, Source: Daily Economic News, Original Title: "Some people in Shanghai directly raise prices by 300,000 yuan for second-hand houses, while others wait quietly for a stock market surge to push up house prices"