To Rent, Not To Buy
2005-5-24 13:00:56 CRIENGLISH.com
It's always better to own a home rather than to rent. But, at the moment many people choose to rent in Shanghai, not knowing where housing prices are heading. CRI's Wang Jing reports from Shanghai.
Renting property has gained popularity in Shanghai's property market during the past week, while house sales dropped sharply.
This fall comes after seven key government departments jointly issued proposals aiming to take the heat from the property market.
The move delivers a heavy blow to real estate speculation, believed to be the major reason for driving up the price of housing.
But, Huang Weiwei, an analyst with the website Shanghai Property Market Window, says that although housing prices in parts of the city have dropped some, where speculators are rampant, there is no apparent decrease of housing prices on the whole. Therefore, it is not a right time to buy a house.
"It is wise for people to rent a house at the moment and wait for the next move from the market. It is still unclear whether the housing price will fall, and, then how much it will fall."
Other reasons not to buy a house include: China's central bank raised the cost of housing loans two month ago, and required down payments of 30 percent of the purchase price, instead of 20 percent.
The joint proposals have also upset investors who are waiting for further appreciation of real estate sector in the next few years.
The proposals require a capital gains tax on real estate bought and sold in less than a year, which has been implemented in Shanghai for two months.
According to sample studies of Shanghai Property Market Window, the prospect of downward investment return has forced many investors to shift to long-term investment and put their properties up for rent. Here's Huang Weiwei.
"House sales have been affected greatly. The annual investment return has dropped from 10 percent two years ago to below five percent now. There's a steady growth of houses for rent at real estate agencies."
She says rent transaction has increased about 10 percent compared to a month earlier.
Analysts say a thriving house renting market signals that the overheated property market is back on the right track.
Additionally, a mature renting market may provide solutions for people not capable of buying houses, thus easing the pressure of demands in the real estate sector.
Currently, high-end villas and cheaper small apartments are among the most popular items in renting market.
For Realtime Beijing, this is Wang Jing.
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