Shenzhen home prices rising after policy relaxation
Sellers raise asking prices for their homes and developers plan to launch more projects after a cut in down payments and transaction taxes
Sellers of secondary homes in Shenzhen have raised asking prices and developers plan to launch more projects following the latest policy relaxation last week.
The city is China's best-performing housing market in recent months amid a nationwide downturn that began in February last year.
To stabilise the market and rein in the sharper-than-expected slowdown in the economy, the government last Monday cut down payments and transaction taxes in its strongest policy support since the global financial crisis to stimulate demand, particularly from those upgrading to larger and better homes.
"The policy now is the easiest since 2009 and the window to buy homes is gradually opening," said consultancy Midland Realty.
Its data showed 21 projects would come into the market this month, up from six in March.
Shenzhen-based China Vanke, the country's biggest homebuilder by sales, will launch the second phase of Vanke Plaza with an expected average asking price of 23,000 yuan per square metre, largely unchanged from the previous phase.
"Sales gradually picked up since the [Lunar New Year in mid-February]," Vanke's Shenzhen branch told the South China Morning Post.
There were half a dozen families visiting the Vanke Dream Home exhibition centre in Shenzhen's northeastern Longgang district, which also served as the showroom for three projects in the neighbourhood - Park Avenue, Hill City and The Glory - last Friday afternoon when the Post reporter was there.
An 88-square-metre three-bedroom flat costs 2.9 million yuan at The Glory, with a down payment of 870,000 yuan for second-home buyers and a monthly instalment of 12,041 yuan if they borrow a 30-year mortgage loan.
However, a sales lady told the Post that local banks were still waiting for detailed rules from their headquarters, mostly based in Beijing. Anyone who decides to buy before that will have to adhere to previous terms, which mean higher down payments but a lower monthly instalment.
Those borrowing from the local housing provident fund, which offers lower rates but is not open to everyone, can enjoy the lower down payment since Tuesday.
Primary home sales in Shenzhen surged 145 per cent last month from February to 4,854 units, but average prices fell 4.92 per cent to 26,566 yuan per square metre, Midland data showed.
Data from another consultancy, Centaline, showed secondary home prices in the city rose 4.03 per cent from February, the fastest monthly gain in six years. It was also the highest growth rate among the six major cities on its radar. Secondary home prices in neighbouring Guangzhou eased 1.36 per cent but picked up 1.7 per cent in Shanghai.
Reports about sellers in the secondary market raising prices by up to 10 per cent and even breaching already signed contracts flew around local newspapers.
The Post learned from a Centaline property agent that the price of a 143 sq metre flat was increased to 8.2 million yuan after the new policy from eight million yuan before.
"Every seller here is raising the price," said agent James Chen. "I don't think prices will ever go down again this year."
The new tax rule gives a waiver to those selling their homes after two years of ownership from the transaction tax, but they still need to pay a 20 per cent capital gains tax if the ownership does not exceed five years.
Improving sales pushed down Shenzhen's stock of unsold property by 5.72 per cent in terms of floor space last month from February, compared with a fall of 2.68 per cent in Guangzhou and 4.78 per cent in Shanghai. Beijing saw a rise of 0.76 per cent.