Shanghai property market gets a bit of a chill

Since the 19th century, Shanghai has been China’s financial hub, as well as its centre of shipping and trade — its relatively relaxed regulations make it the “showpiece” of mainland China’s booming economy.

Property prices soared last year, prompting regulators to enact measures to take out some of the heat in order to avoid a crash and the price trend is expected to be stable this year after a slew of cooling measures were introduced between March and October.

Communist authorities were careful not to take drastic steps in cooling down the market like increasing interest rates. However, some experts claimed that cooling real estate market may expose Shanghai to severe financial headwinds.

According to Colliers International, house prices jumped by 27.82% in the third quarter of 2016. Dwellings have a hefty price tag of around US$1,271 per square foot (sq. ft.) and rental yields in Shanghai are extremely low at around 2%.

No one can own land in China as it is the property of the Communist State. One can only obtain rights to use the land. A plot of land can be leased for residential use for up to 70 years. Non-Chinese may buy a home in China if they have worked or studied in the country for at least a year.

Non-Chinese cannot be landlords and they are forbidden to own property for investment. The market is also highly volatile and there are no real ownership laws — even for the locals — as all land belongs to the people [e.g. the Communist Party] state and leases can be terminated at a whim. There is no independent judiciary either.

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