Housing prices in Shanghai are likely to grow at a slower pace this year after recording a 33 percent surge in 2003, some industry reports indicated.
The benchmark of the city's new apartment prices, the Shanghai Housing Index, grew by 1.9 percent last month to hit 1,123 points, the Shanghai Real Estate Index Office reported yesterday.
The index surged 33.1 percent in 2003, compared with the 15.5 percent growth in 2002.
The average new housing price in Shanghai was 4,553 yuan (US$549) per square meter at the end of 2002, according to the National Bureau of Statistics. Average prices increased to almost 6,000 yuan per square meter by the end of last year.
While average annual salaries in the city rose 12.2 percent last year, to reach 14,867 yuan, they couldn't keep up with skyrocketing housing prices.
"My father failed to save 300,000 yuan after working for over 30 years. But in just half a year, our new apartment appreciated by that amount," said Ma Jing, who bought an apartment for 5,800 yuan per square meter in May. The apartment is now worth 9,000 yuan per square meter, thanks to the newly built Dalian Road tunnel.
The price of second-hand apartments in the city rose 17.1 percent last year.
The apartments in suburban Qingpu, Songjiang and Fengxian districts saw active trading, mainly boosted by construction of new metro lines.
"Price hikes for second-hand apartments are a chain reaction to that of new housing projects. With lower unit prices, the pre-owned apartments are pursued by families who can't afford new ones," said Huang Weiwei, secretary general of the Shanghai Existing Housing Index Office.
"New apartment prices will only see moderate growth this year, as more supply is put onto the market," said He Xiaocheng, an analyst with the Shanghai Real Estate Index Office. "The government's policies on land leasing and taxation will also help to control the growth rate."
In an independent report, Centaline Property Ltd noted the growing supply ready for rent has caused a decline in rents and may cut investors' profit margins. High-end apartments could see their values hurt the most this year.
According to the agent's report, the rental and trading prices of second-hand high-end properties declined by an average rate of 2 percent a month in the second half of last year.