(Yicai) Feb. 3 -- Shanghai has initiated a pilot program to buy pre-owned homes with the aim of boosting the supply of affordable rentals for migrants and young people as well as invigorating the city’s second-hand housing market.

The pilot kicked off yesterday and covers Jing’an and Xuhui, both central districts, plus parts of Pudong New Area. Public rental and subsidized housing companies affiliated with the three local governments signed credit cooperation agreements with China Construction Bank, marking the official start of the acquisition work.

Under the initiative, priority will be given to buying small and medium-sized resale homes under 70 square meters that are in desirable locations, have clear property titles, and whose owners are keen to relocate. The authorities have not yet disclosed the program’s overall scale or the timetable for implementation.

Acquisitions by district government-owned companies will help Shanghai’s housing safety net, an industry insider told Yicai, adding that the purchase of existing homes is much faster than building them for public rentals, enabling faster access.

The initiative will both strengthen housing in the three pilot districts and improve overall liquidity in the city’s resale market, according to Lu Wenxi, senior analyst at Shanghai Centaline Property. “Many sellers under this program will use the proceeds to buy better homes, which will drive the continuous release of local home-buying demand,” Lu said.

Shanghai’s resale housing market is already showing signs of stabilization. Sales climbed 25 percent to about 22,000 units last month from a year earlier, staying above the 22,000 mark for the third straight month, according to data from the Shanghai Lianjia Research Institute.

The city’s second-hand home prices have not declined for three consecutive months, and the market’s wait-and-see attitude is gradually abating, Li Gen, head of the Shanghai Lianjia Research Institute, told Yicai. The pilot buying program will further boost transactions, Li predicted.

Editors: Tang Shihua, Futura Costaglione