Shanghai report cheers up housing agents, boosts stocks in the sector

SHANGHAI - People who have held Shanghai resident cards for more than three years are eligible to buy a second home despite their non-permanent residence status, a municipal housing official confirmed to local media for the first time, triggering market rumors that housing regulations would be eased in the city.

Potential buyers check information on second-hand housing in Shanghai. The city is allowing non-locals who have resided there for more than three years to buy a second home. Chen Fei / Xinhua

"Ever since the home purchase restrictions were implemented, long-term resident card holders have been allowed to buy a second residence, just like local Shanghai people," an official from the Shanghai Municipal Housing Security and Administration Bureau was quoted as saying by the Shanghai Securities News on Wednesday.

The individuals involved don't have the same legal status as those with permanent residence certificates, or hukou.

The official, who wasn't identified, said this stance isn't an adjustment or reversal of the existing housing policy.

"At the very beginning when the policy was announced, people who had held resident cards for more than three years were treated equally with local Shanghai people, meaning they were eligible to buy a second home," the official said.

However, according to the circular dated on Jan 31, 2011 by the municipal government, titled "Carrying Out the State Council's Opinion to Further Control the Property Market", only local Shanghai families were eligible to buy a second home.

Hui Jianqiang, research director of Beijing Zhongfangyanxie Technology Service Ltd, a real estate information provider, said a long-term resident card holder should be treated equally.

"They pay tax here, they have local social security accounts ... so it's natural they are treated equally in home purchases," Hui said.

Property agencies had a somewhat different take on the "clarification".

"Inspired by these media reports, we have contacted almost all the city's housing trading centers, where we got confirmation that long-term resident card holders can buy a second home, a sharp contrast with several months ago when similar transactions were rejected," said Zhu Pingping, an analyst from Shanghai Sinyi Realty Agency and Consulting Co Ltd.

According to Zhu, a client who'd held a Shanghai resident card for more than three years wanted to buy a second home in the Pudong New Area last October, but Zhu was not sure then if the client was qualified.

To her surprise, the Pudong New Area property trading center approved the deal.

In the following days, Zhu and her colleagues called other property trading centers about this potential business, but all the other districts declined to handle such deals.

During the week ending Sunday, 160,800 square meters of residential space in gross floor area were traded across Shanghai, up 40.8 percent from the previous week, according to the Shanghai Deovolente Realty Co. The average price rose 18.2 percent to 19,753 yuan ($3,136) a sq m.

Despite the news, Zhu said it was unlikely that long-term resident card holders would shore up the sluggish housing market, as many would be deterred by higher prices and the possibility of having to pay a property tax.

Huang Zhijian, executive director of Uwin Real Estate Research Center based in Shanghai, speculated that the policy "adjustment" would mean more fine-tuning in other cities.

In previous months, several cities - including Beijing and Shanghai - "fine-tuned" their housing policies. In some cases, this meant revising the definition of "ordinary" houses, which means a lower tax rate for the average buyer.

The reports on the Shanghai policy lifted property stocks on Wednesday. The 141 property-related stocks tracked by Orient Securities rose an average of 2.86 percent.