Shanghai property market is overheated: Top city official

A general view of a residential area in the Puxi district of Shanghai in August, 2013.
A general view of a residential area in the Puxi district of Shanghai in August, 2013.PHOTO: REUTERS

SHANGHAI (BLOOMBERG) - Shanghai's most-senior official said the city's property market has "overheated" and should be more tightly controlled after a recent surge in residential housing prices.

"An irrational and overheated sentiment have emerged in the Shanghai real estate market, and these sentiments have raised home prices," Mr Han Zheng, the city's Communist Party chief, said at briefing during annual legislative meetings in Beijing on Sunday (March 6).

Residential home prices in China's so-called first-tier cities of Beijing, Shanghai, Tianjin and Shenzhen have surged amid a relaxation of housing curbs intended to boost real estate investment and increased monetary stimulus from the central bank.

New home prices in Shanghai jumped 2.2 per cent in January from a month earlier, while existing home prices increased 2.7 per cent from a month earlier, the most since 2013, according to data from the nation's statistics bureau.

Last month, lines of prospective buyers outside property agents' offices in a Shanghai suburb clogged roads and forced police to curb traffic to maintain order, Caixin reported.

The frenzy prompted the city government to issued a call for calm on its official microblog account.

Han said his city would strengthen housing regulations without giving details on specific measures, saying only that regulations should be "scientific as housing is a specialty commodity".

In a sign of the diverging trends for property markets in China's largest cities from other regions, the governor of Guangdong province discussed at a separate briefing on Sunday a measure that would bolster home prices in his jurisdiction.

Mr Zhu Xiaodan said his province is drafting a plan to allow some large state-owned enterprises to purchase homes to help reduce inventory, with the goal of reducing 20 million square metres of home inventory in three years.

Figures for 70 cities tracked by the National Bureau of Statistics showed last month that new-home prices climbed month- on-month in 38 cities in January, compared with gains for 39 in December. At the same time, 24 cities saw declines in January.

The property market in Shenzhen, the city in Guangdong province that borders Hong Kong, has seen the biggest boom in the country, rising 52 per cent in January from a year earlier.