Shanghai's new commission rule for the housing intermediary business for second-hand property could dampen the business of many local housing agents, forcing some 30 percent of the housing brokers out of business in the following year and leading many others to switch to the rental market, according to industry insiders.

Under the new rule, which has taken effect since this month, the ceiling of commission charge on a second-hand apartment deal is reduced to 2 percent of the home's total price from the existing 3.5 percent.

In an attempt to find new revenue sources, some housing companies will probably rush to buy new property projects and sell them at higher prices on the second-hand housing market, predicted market analysts, cited by today's Shanghai Morning Post report.

The move could further push up the already hovering housing prices of the city's new housing sector.

"The 2 percentage point charge is barely to make balance for big housing companies as ours," said Zhao Shuping, operation supervisor of Stanford Realty Service Company, a local housing agent firm.

For smaller companies, which used to squeeze profits from the commission income, the new rule could form a heavy blow, she pointed out.

But she said the new rule would be a momentum for the local second-hand housing market, expecting the business to rise by 15 to 20 percent in a short term.

(China Daily October 11, 2003)