Housing prices in Shanghai have fallen sharply as potential buyers are holding back purchase plans in the hope that they can benefit from a new housing policy to increase supply.

 

The average price of an apartment in Shanghai dropped 6.36 percent from October to 7,731 yuan ($1,043) per sq m last month due to government policies to curb speculation, statistics from the China real estate index showed.

 

"My dream of buying a bigger house seems closer to reality," said Jin Weikang, a 51-year-old worker in a dairy processing plant.

 

Jin was encouraged by the remarks of Premier Wen Jiabao, who said in a speech at the National University of Singapore on November 19 that China should increase housing supply by promoting low-rent houses and subsidized housing, as well as through market regulations on private housing.

 

Wen emphasized that subsidized housing should be sold mainly to "the middle-class group".

 

Like other traditional Chinese fathers, Jin has saved money for years to buy an apartment for his son.

 

"I gave up the idea sometime in May this year, when housing prices began to soar," said Jin.

 

He is now living in a 15 sq m, second-floor apartment in an old building with his wife and their 16-year-old son. The family income amounts to about 5,200 yuan ($702) a month, including Jin's salary of 4,000 yuan and his wife's pension of 1,200 yuan.

 

"We save around 3,000 yuan per month, but it is still hard for us to buy an apartment in Shanghai," said Jin.

 

Many Shanghai residents and the thousands of white-collar workers from around the country shared Jin's frustration.

 

Cao Jian, a 31-year-old senior manager of a foreign-owned company, is trying hard to settle down in the vibrant city.

 

"The soaring house prices once depressed me a lot," said Cao, who is now renting a house in the middle-ring area of the city.

 

"But now I am waiting for the launch of subsidized homes, which is said to target middle-class people like me," Cao added.

 

Another Shanghai resident, Zhou Yi, comes from a small town in Anhui Province.

 

He now works at a Shanghai-based foreign trade company where he gets a monthly salary ranging from 3,500 yuan to 4,000 yuan, depending on his performance.

 

He said he did not start thinking about buying his own apartment until a year ago, when his girlfriend discussed marriage with him.

 

The couple decided to wait and see how the new housing policy could benefit them.

 

"I'm not in a hurry to buy an apartment," Zhou said.

 

"My girlfriend and I decided to wait for some time, although we are not sure how long it has to be.

 

"Of course, we don't know whether we can really benefit from the policy. What's more, I'm afraid the affordable houses would be located in remote areas lacking adequate transportation facilities," Zhou added.

 

Market insiders said that the price of Shanghai housing is not expected to rise further next year because of government tightening policies and the increase in supply.

 

"Housing prices in Shanghai will cool down, and the government's recent policy is to create a more sustainable market," said Danny Ma, associate director of CBRE Research.

 

(China Daily December 7, 2007)