Shanghai’s Small-Home Buyback Program Gains Traction With 523 Units Acquired

(Yicai) May 21 -- Shanghai’s pilot repurchase program for small pre-owned homes, which was launched in February, has gotten off to a strong start with 523 housing units acquired by the local government to date, helping to invigorate the city's housing market and lift sentiment.The purchased properties are located in the downtown districts of Xuhui and Jing'an as well as Pudong New Area, the Shanghai Municipal Housing Security and Housing Administration Bureau said today. The homes are mainly small apartments with floor areas of less than 70 square meters and are mostly priced under CNY4 million (USD556,000).After undergoing standardized renovations, these properties will be added to the government’s affordable rental housing pool, with rents expected to be lower than average market levels. Future tenants are expected to include technology talent, young workers, new urban residents and other groups with housing needs.Xuhui district has completed the purchase of 458 units so far, far ahead of the other two pilot districts. Pudong New Area has finished 64 deals, with over 200 additional second-hand houses under in-depth negotiation, according to the housing authority.Homeowners who sell their houses to the government receive housing vouchers that can be used city-wide to purchase either new or pre-owned homes. This together with the program’s pricing mechanism, which ensures fair valuations, have significantly boosted people’s willingness to sell.Shanghai rolled out the buyback scheme to help homeowners looking to upgrade their living conditions sell their existing homes more quickly and purchase better homes afterwards, so as to revitalize housing market activity and lift market sentiment.Homeowners selling properties to the municipal government do not receive direct cash payments but instead receive housing vouchers equal to the value of the sold property. These vouchers can then be redeemed for cash from the government after the new property transaction is completed.The pilot program will be expanded to cover all the city's downtown districts during the second quarter, the housing authority said.Shanghai’s second-hand housing market has seen a marked rebound thanks to supportive local government policies together with the gradual recovery of the overall property market. Sales in April surged 22.3 percent from a year earlier to hit 28,742 units, the highest level for the same period in almost a decade, according to official data.And market momentum has remained strong in May. Sales of pre-owned homes jumped 26 percent as of May 19 from a year earlier to around 16,000 units, according to data from property platform Anjuke. If this pace continues, sales this month are expected to top 20,000 units, marking the sixth consecutive month with monthly transactions above that level.In Shanghai’s property market, monthly sales of 20,000 second-hand houses is widely regarded as the key threshold dividing market expansion from contraction.Editors: Tang Shihua, Kim Taylor