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SCMP Reporter

RESIDENTIAL property prices have been tumbling in all four of Hong Kong's favourite home-buying locations in Guangdong.

  Further falls are expected with the onset of China's new austerity programme, but a dramatic overnight crash in prices, as what was first feared, now seems ever more unlikely.

  New data from property consultancy C.Y. Leung & Co show that average so-called ''luxury'' home prices in Shenzhen have dropped 29 per cent this year.

  Values in Guangzhou have fallen 9.5 per cent since their peak at Lunar New Year, while those in Dongguan have slid 18 per cent since Christmas.

  In Weizhou, prices began falling long before its three biggest rivals.

  Developers in Weizhou were the first in southern China to sell homes to buyers in Hong Kong, about three years ago.

  At first they enjoyed much success. But Weizhou has since fallen from grace as the most popular location.

  The city has developed a bad reputation for poor regulatory control of its property market. It is also said to be out of favour because of widespread smuggling and corruption.

  Numerous Hong Kong buyers claim they have been ripped off by developers there. The most frequent complaint has been from buyers who visited the homes after they were built, finding them entirely different from the attractive descriptions put out in advertisements.

  Prices in Weizhou have been falling for more than a year now. They are down 21 per cent since August last year.

  Weizhou, like virtually everywhere else in Guangdong, has been dogged by a serious oversupply of new residential units.

  Last year, more than 240,000 hectares of land in China were set aside for development, hugely exceeding the 100,000 hectare guideline set by Beijing.

  The Government's austerity measures, announced on July 3, aim to take the heat out of the runaway property market by severely restricting authorisation and bank loans for real estate development.

  It has already enjoyed some success without causing the market to collapse altogether.

  In the past four weeks, several projects in Dongguan have sold reasonably well in Hong Kong, on average attracting 100 buyers a day.

  Before the austerity drive developers could have expected to sell perhaps 200 or 300 units a day to eager Hong Kong buyers.

  Well-located housing projects in Guangdong are still selling out. It is just taking developers a little longer.

  The slowdown in interest has been a gradual process.

  Edward Cheung Kwok-ching, director of C.Y. Leung & Co, said: ''Hong Kong buyers have been taking a more cautious attitude for some time now but not to an extent where there has been any mass exodus.

  ''There are still many Hong Kong manufacturers with their factory bases in Guangdong wanting homes.

  ''And around 80 per cent of Hong Kong's population have their origins in Guangdong.''   Mr Cheung believes property prices in the big cities have probably corrected as much as they are going to.

  However, developments in remote locations could be much more severely hit.

  He sees the Government's interference in the property market as good.

  ''Projects which do not have substantial financial back-up will be told to stop and that will be good news to the market,'' said Mr Cheung.

  ''The level of supply will be better. Good projects will survive and they will tend to be those provided by better, more experienced real estate developers.

  ''There should be a slowdown in the number of projects coming on to the market. Supply has been ferocious over the last few months.''   Mr Cheung believes home prices in the core cities of Guangdong will now level off before starting to pick up at the end of the year in popular locations.

      Confident of better times ahead, many speculators are said to be busy snapping up property at discount prices while the market is depressed.



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