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Sales volume  shows third consecutive month of modest  growth after  14-month slump
Shenzhen  may become the first mainland city to recover from the  nationwide downturn in property prices,  with sales volume now into  its third consecutive month of a modest  rebound.
Until the latest  signs of a recovery in demand, the city had led the market downwards with sharp falls in sales  since the third quarter of 2007, after the government released a series of austerity measures aimed at containing the sharp rise in property prices at the time.
Research by property consultant DTZ shows  that transactions in Shenzhen's primary market  had fallen to  about 300,000 square metres a month over the period from August 2007 to October last year, from previous average monthly levels of  roughly 500,000 square metres.
But in recent months, the number of deals has  increased steadily  above  the average  level during the 14-month decline, despite  overall sentiment on the market  remaining poor because of the global financial crisis.
The DTZ research  shows  sales volume in Shenzhen's primary market   rose 74 per cent to 590,000 square metres in November last year from 340,000  square metres in October and  a further 24 per cent to 730,000  square metres in December.
Although  sales then showed a 46.58 per cent  month-on-month  decline  last month to 390,000 square metres, the  volume  was higher than the October low point for sales and well above the  average sales volume during the market slump.
Alan Chiang Sheung-lai, the head of residential property at DTZ's mainland division, said   transactions fell last month because of the long  Lunar New Year holiday break.
'In December, we noticed  that transactions in Shenzhen's property market had rebounded gradually in the last two months of 2008,' said Mr Chiang.
'But at that stage, we couldn't confirm that the consolidation in the market had come to an end.'
He said he now believed  the increase in transaction volume suggested  property prices in Shenzhen had fallen to levels where buyers were willing to return to the market.  He expected sales volume to exceed 500,000 square metres this month.
'If the transactions volume rebounds to 500,000 square metres or  more for three to four months, that would suggest Shenzhen's property market is back to normal,' he  said.
Mr Chiang said   buyers were returning to the Shenzhen market  following the  slide in  prices last year.
'Shenzhen recorded the sharpest drop in prices among the mainland cities and was also the first city in which prices dropped to  reasonable levels,' he said.  He  expected  property prices in Shenzhen  to stay at  these levels for  some time, despite the consolidation in the market  having come to an end.
'The new  housing stock in Shenzhen has reached a high  of  3 million square metres. Property prices will not rebound until the abundant stock  has been absorbed,' he said.
He estimated it  would take about four months to absorb the  supply.
'Demand for residential units in the city remains strong, as the financial crisis has had a limited impact on the city's  [technology] and other businesses,' he  said.
Property prices in Shenzhen  had fallen  25 per cent  off their peak in July  2007 before beginning to stabilise  over the  past few months, said Samuel Wong,  the general manager of Midland Realty China's Shenzhen branch.
Centaline (China)'s agency business in Shenzhen has improved in the last few months. The firm sold 200 units during  the Lunar New Year.
Andy Lee, the general manager of the  Shenzhen office, said the firm sold 150 new units   over the past weekend. The transaction volume was 20 per cent higher than  before  the  festival.
He expected  property prices to  increase 5 to 10 per cent this year.
Many Hong Kong people  bought properties in Shenzhen a few years ago, before  Beijing restricted   foreigners, including Hong Kongers, from buying second homes  on the mainland,  starting in 2007.
Mr Lee said the number of Hong Kong buyers  had not  rebounded, as the government had not relaxed the  ban.
China Overseas Land & Investment vice-chairman Kong Qingping said  property prices in southern China had fallen to  2006  levels  and had reached their trough.



Shenzhen ushers in sector rebound