Shenzhen land bureau unit urges measures to halt drastic fall in sales

PUBLISHED : Wednesday, 22 October, 2008, 12:00am
UPDATED : Wednesday, 22 October, 2008, 12:00am

The Shenzhen property market is in urgent need of government intervention to arrest plunging sentiment, according to a research unit of the city government's land bureau.

The research arm of the city's Bureau of Land Resources and Housing Management on Monday released a report on the property market in the first nine months of this year that highlighted drastic declines in property sales and capital values compared with a year ago.

Total gross floor area sold in the period fell 47.81 per cent to 2.6 million square metres, the report noted. Residential space sold accounted for 2.4 million squaremetres, and represented a 46.32 per cent drop from residential sales volumes in the first three quarters of last year.

In terms of capital values, the price of homes sold in the city now average 12,430 yuan (HK$14,138) per square metre, down 28.35 per cent when compared with last October's 17,350 yuan per square metre.

The report said the sharpness of the decline was aggravated by the overheating of the property market last year, as well as macroeconomic measures taken since then by the central government and the troubled financial environment worldwide.

'The worsening global credit crisis and the slowdown of world economies have added uncertainties to the country's economic outlook. As a result, it will hit the development of the property market,' researcher Wang Feng wrote in the report.

Plagued by these uncertainties, potential buyers and developers preferred to hold on to their cash instead of buying homes or investing in property, Mr Wang said.

'Therefore, government intervention in the property market is sorely needed,' he said, without recommending specific measures that might be taken.

Andy Lee, a general manager at Centaline (China), believed the city government would soon launch a stimulus package to boost the market. However, he had reservations about the effectiveness of such policy intervention.

'Taking into account that 18 mainland cities such as Shanghai, Nanjing and Hangzhou have launched various measures to boost the property market I will not be surprised if Shenzhen follows suit.

'But it may not be much help in the wake of developers' price-cutting strategies to lure buyers amid a huge new supply,' he said.

About 14 projects are scheduled to launch this month at prices a few percentage points lower than in September but still more than 30 per cent off their peak last year, according to Mr Lee.

Buyers nonetheless remain reluctant to enter the market against a backdrop of sustained bad news such as manufacturers closing their plants in the city.

'Workers will be cautious about home buying since they are uncertain about job security,' Mr Lee said.