Jiading and Songjiang districts as well as the Pudong New Area were the best performing areas by sales last week.

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1 Property Insight November 2016 PROPERTY NEWS Shanghai s new home market posts sluggish sales By Cherry Cao Time: SHANGHAI S new home market saw sluggish sales last week as buyers adopted a wait-and-see sentiment while supply was almost frozen, according to latest market data. The area of new homes sold, excluding government-subsidized affordable housing, fell 5.5 percent to 207,000 square meters during the seven-day period ended on Sunday, Shanghai Centaline Property Consultants Co said in a report released yesterday. While outlying areas continued to lead home sales, transaction volume in these areas suffered a major setback as a growing number of potential buyers decided to sit on the sideline for a while, said Lu Wenxi, senior manager of research at Centaline. Jiading and Songjiang districts as well as the Pudong New Area were the best performing areas by sales last week. Meanwhile, only six homes totaling 979 square meters were released locally, following zero supply in the previous week, Centaline data showed. Lu said it could be pretty hard to see sales maintain their the current low level with such a low supply released. The average cost of new houses rallied notably despite the slack sentiment among home seekers and real estate developers. New houses were sold at an average 46,224 yuan (US$6,825) per square meter last week due to projects targeting home upgraders rather than first-time buyers, Centaline data showed. Four of the 10 best-selling projects cost 50,000 yuan per square meter and above. Tightening measures by the government to curb speculative demand have proved to be effective and no significant rebound in sales volume should be expected in the near future, Lu said.

2 A housing project in Baoshan District was the most popular after buyers bought 135 apartments last week at an average 55,298 yuan per square meter. Shanghai s housing market cools in October By Cherry Cao Time: SENTIMENT among both home buyers and real estate developers dropped significantly in Shanghai last month as government vows to curb speculation and cool down the overheated market proved to be effective. The area of new residential properties sold, excluding government-funded affordable housing, fell 16.3 percent from September to 869,000 square meters, the lowest in eight months, Shanghai Centaline Property Consultants Co said in a report released today. That, however, represented a year-over-year plunge of 42.5 percent. On the supply side, only 299,000 square meters of new houses were released locally in October, a month-over-month drop of 56.2 percent and a year-on-year dive of 82.8 percent, according to Centaline data. "This amount of monthly supply is a record low for Shanghai since the city introduced the online registration requirement for property sales," said Lu Wenxi, senior manager of research at Centaline. "Promotional sales campaigns, which used to be conducted in a high-profile approach by many developers, became rare too as tightening moves implemented in more than 20 domestic cities and mostly over the past month are making real estate companies more cautious while making their release plans." Shanghai announced on October 8 a set of measures including increasing land supply and strengthening supervision of capital to cool down its red-hot property market, following the steps of some of its domestic counterparts which also registered rapidly surging home prices. Funding sources for land purchases will be regulated and stricter supervision over new home prices will be implemented while authoritative property market information will also be released on a regular basis to stablize market expectations, according to the local housing authority. By average price, new houses sold last month cost an average 43,838 yuan (US$6,457) per square meter, a fall of 2.2 percent from September but still an increase of 31.7 percent from same period a year earlier. Fewer high-end products were launched locally as a result of stricter implementation of pre-sale approval and registration for new home releases. For instance, a total of 413 housing units carrying a price tag of 80,000 yuan per square meter and above were sold in Shanghai last month, a monthly drop of 28.2 percent. That compared to a 10.8-percent decrease for new residential properties in the 30,000 yuan per square meter and below category, Centaline data showed. Citywide, a development in Lingang New City, a suburban port area in Nanhui, recorded sales of 408 units, topping all residential projects last month.

3 China to act against home price violations By Xinhua Time: CHINA'S price watchdog and housing market regulator are set to begin a nationwide month-long inspection of the real estate sector to review the working practice of both developers and agents. Home prices must be genuine and marked clearly in sales offices and all other charges must be not be concealed, according to a statement jointly released by the National Development and Reform Commission and the Ministry of Housing and Urban-Rural Development Tuesday. Developers and agents must disclose the number of unsold houses within a set time, the statement said, stressing that any misdeeds will be dealt with accordingly. The inspection starts Thursday. This is the latest move by the central authorities to improve the real estate sector after irregularities were highlighted as the country struggles with an overheated property sector. The housing market in major cities has shown signs of cooling as a spate of measures to contain prices were rolled out by the central government. China s housing market cools in October By Cao Qian Time: HOME prices in China climbed at a slower pace in October as tightening measures introduced around the country to cool down the domestic residential market began to take effect, the China Index Academy said in a report released today. The average cost of a new home rose 1.65 percent from a month earlier to 12,825 yuan (US$1,878) per square meter, decelerating from a 2.83 percent growth in September, said the academy, which monitors market activity in 100 cities nationwide. Prices rose in 79 cities in October, down from 81 cities in September. They fell in the rest 21 cities. By city, Wuhu in eastern Anhui Province led all with a month-over-month price gain of 4.35 percent, immediately trailed by Changsha in Hunan Province. Among the country's four gateway cities, Guangzhou took the lead with a monthly gain of 2.82 percent, followed by Beijing, Shanghai and Shenzhen, where new home prices rose 1.26 percent, 1.09 percent and 0.27 percent, respectively, from a month earlier, the academy's data showed. "Most of the cities we track registered rather stable performance last month as rein-in policies launched in many cities across the country around the National Day holiday have made preliminary achievement in cooling down the overheated property market," the academy said. "Looking forward, the latest round of tightening measures are expected to extend its forces over the coming months and continue to bring realism back to the market as the year end is approaching."

4 The median price of a new home in the 100 cities stood at 7,306 yuan per square meter in October, a month-over-month increase of 2.2 percent and a year-over-year gain of 2.67 percent, the academy said. More than 20 Chinese cities, mainly first-tier and selected second-tier ones where home prices have been surging this year, have implemented recently a series of austerity measures that include higher down payment requirement and more stringent home purchase restrictions. Shanghai buyers less confident of the housing market By Cherry Cao Time: SENTIMENT among home buyers continued to drop for the fourth consecutive week in Shanghai amid an insignificant rebound in supply, latest market data showed. The area of new residential properties sold, excluding government-subsidized affordable housing, plunged 43.6 percent to 102,700 square meters last week, Shanghai Centaline Property Consultants Co said in a report released today. "It was the second-lowest weekly transaction recorded in Shanghai so far this year, with notable drops in all areas around the country," said Lu Wenxi, senior manager of research at Centaline. "Not a single residential project managed to secure sales of more than 100 units during the seven-day period, a proved sign of market cooling." Average cost of new homes gained 5.6 percent from a week earlier to 46,074 yuan (US$6,735) per square meter, according to Centaline data. Three of the 10 best-selling projects cost more than 60,000 yuan per square meter while six others all stood between the bracket of between 30,000 yuan and 40,000 yuan per square meter. On the supply side, about 30,000 square meters of new houses at one project located in Lujiazui were released to the local market last week, compared to zero supply in the previous week. Tougher rules to cool home market By Cherry Cao Time: SHANGHAI rolled out tightening measures last night in its bid to cool the city s overheated housing market. From today, buyers of first homes will have to pay a minimum 35 percent down payment, compared with 30 percent previously. Moreover, the term first-time home buyers now only refers to those who do not own any home in the city and have never applied for any mortgage loans from either commercial banks or public housing funds anywhere in the country. Those who have owned a house in the city or currently have no house but have applied for mortgage loans from either commercial banks or public housing funds will be considered as second-home buyers.

5 Previously, anyone who did not own a home was considered a first-time buyer no matter whether they had applied for mortgage loans or not. Second-home buyers have to pay a minimum 70 percent down payment if the property is defined as a non-normal home, and a minimum 50 percent if the house is normal, something unchanged from before. Normal homes within the Inner Ring Road are defined as those no larger than 140 square meters and costing less than 4.5 million yuan (US$649,600). Between the Inner and Outer Ring roads, normal houses are those costing under 3.1 million yuan and beyond the Outer Ring Road, below 2.3 million yuan. All other homes are deemed non-normal. For applicants of public housing funds, which provide better interest rates than commercial banks, buyers of second homes for upgrading purposes will have to pay a minimum 70 percent down payment if the property is defined as a non-normal home, and a minimum 50 percent deposit if the home is normal. Mortgage rates for second normal homes will be raised by 10 percent above the standard rate. In addition, the mortgage ceiling for individual applicants of second normal homes will be reduced by 100,000 yuan from now, while no mortgage loans should be provided for families who have already received loans from public housing funds twice in the past. This batch of further austerity measures seemed not too surprising to me as housing prices in Shanghai still remained at high levels despite a recent contraction in transaction volume following policies introduced right after the weeklong National Day holiday, said Lu Wenxi, senior manager of research at Shanghai Centaline Property Consultants Co. New home prices in Shanghai, excluding government-funded affordable housing, rose 0.5 percent last month from September, according to the National Bureau of Statistic. On a year-on-year basis, however, they jumped 37.4 percent, the bureau s data showed. The latest change in the definition of a first-time or second-time buyer will especially affect buyers who seek to upgrade their homes. Currently, about 90 percent of home buyers who buy houses within the Middle Ring Road are upgrading, while 60 percent of buyers buying properties within the Outer Ring Road are upgrading, according to Centaline data. Previously, a large proportion of people seeking to upgrade would choose to sell their homes first in order to qualify as first-time buyers but under the new policies, many of them will be considered second-time buyers, Lu said. Moody s: China s residential property market will be stable next year By Cherry Cao Time: OUTLOOK for China's residential property market is stable next year though regulatory risk remains high in light of the rapid growth in home and land prices, according to a latest forecast by international ratings firm Moody's.

6 "We expect the growth in nationwide contracted sales by value to be flat or slightly negative in 2017, against a high base of contracted sales for 2016," said Kaven Tsang, vice president and senior credit officer at Moody's. "We estimate sales growth of around 25 percent year-on-year for the full year of 2016." Sales volumes will decline by around 5 to 10 percent next year thanks to the tightening measures implemented in major cities in September and October, but the decline will be partly offset by a modest increase in prices, Tsang predicted. In terms of price, a sharp decline seems unlikely in the next six to 12 months, given the relatively low inventory levels in high tier cities, Moody's said. On developers' side, their gross margin will stabilize next year mainly due to reduced destocking pressures and improved selling prices, amidst the strong contracted sales registered during the past 12 to 18 months, according to Moody's, which rates 50 developers in China. A further dramatic tightening of regulatory measures to curb persistently high property prices, which will possibly trigger a fall of more than 5 to 10 percent in national contracted sales over the next six to 12 months, may change the sector outlook to negative. On the other hand, if national contracted sales rise by more than 10 percent annually on a sustained basis and in a low regulatory risk environment, the outlook could shift to positive, Moody's said. ECONOMIC NEWS Consumer confidence index flat in Q3 By Ding Yining Time: CHINESE consumer confidence index was flat at 106 in the third quarter from the second quarter, according to market research firm Nielsen s latest survey. China s economy is generally in good shape and on track for stable economic growth as it restructures, said Yan Xuan, president of Nielsen China. The stable consumer confidence index further proves that Chinese consumers are adjusting to the new economic trend. Six out of 10 Chinese respondents were confident about their personal finances and as many as 58 percent of consumers were also upbeat about job prospects in the coming year. Another 49 percent believed now is a good time to spend. China may experience some short-term pains during its economic transformation, but the country s new economy is vibrant and new businesses are booming with new growth momentum accumulating, the report said. The consumer confidence index in east China has been climbing steadily from 117 since the first quarter of this year to 120 in the third quarter, the highest level in two years. The same trend appeared in the index for West China, from 95 in the first three months to 98 in the third quarter amid favorable policy support from the government.

7 The consumer confidence in second-tier and third-tier cities also climbed as employment recovered there. China s economy shows stabilization By Leng Cheng Time: CHINA S economy showed more signs of stabilizing in October, but disappointing retail sales growth clouded the outlook. In the first 10 months, fixed-asset investment rose 8.3 percent year on year, slightly ahead of market expectations, data from the National Bureau of Statistics showed yesterday. Investment by state-owned companies surged 20.5 percent, though the pace cooled slightly from the first nine months. In an encouraging sign, growth of private investment picked up to 2.9 percent from 2.5 percent in the January-September period, though it remained sluggish after hitting a record low of 2.1 percent in the first eight months of the year. Private investment accounts for about 60 percent of overall investment in China. The increased FAI was buoyed by infrastructure projects and was a reflection of improving demand and strengthening internal growth engine, Mao Shengyong, a bureau spokesman, said at a media briefing yesterday. But growth in retail sales in October cooled to a five-month low of 10 percent from 10.7 percent in September, missing analysts hopes for a steady growth. The main reason to blame is the high level of comparison with last year, Mao said, adding that booming car sales due to tax preferential policies pushed higher the figure of October last year. But consumption can maintain stable growth. There should not be a problem achieving this year s GDP growth targets, Mao said. October s industrial output also missed expectations, rising 6.1 percent to match the same pace as in September. Higher factory prices have helped boost industrial profits, giving companies some breathing space amid government campaign to trim capacity. Bank lending also slowed sharply last month, data last week showed, suggesting that demand for mortgages was cooling after a series of measures imposed by over 20 local governments in October. These measures slowed the growth in housing sales to 26 percent year on year in October from 35 percent in September. For more information, please visit