Shenzhen’s high-end housing market remains on the boil despite the city government’s introduction of tighter buying restrictions. A newly launched residential project facing Shenzhen Bay, The Peninsula phase three, sold 409 flats – more than 80 per cent of those on offer – last weekend, with the value of sales totalling 5.2 billion yuan (HK$ 6.2 billion). The average price per unit was more than 10 million yuan. The developer, Nan Hai Corporation, said on Monday that more than 2,000 potential buyers had visited the sales centre over the weekend. David Hong, head of research at consultancy China Real Estate Information Corp, said: “Projects in prime locations are in short supply in Shenzhen.” Nan Hai describes The Peninsula as sitting in the most dynamic area of Shenzhen, close to Shekou Port and the Qianhai free-trade zone, with the sea on three sides. Phase one of the project sold at an average 10,000 yuan per square metre in 2006. Ten years later, average selling prices for phase three are now 100,000 yuan per square metre. In the same decade, average housing prices in the city have risen fourfold. The tightened policy would have some impact on the market in the short term, especially transactions for second-hand homes Du Jinsong, Credit Suisse Shenzhen home prices surged 58 per cent in the past year, making it the most expensive city in mainland China. To rein in prices, the city government signalled in February that a tightening of policy was imminent, with the new measures finally being rolled out late last month. They include rasing down payment requirements and extending the length of time someone has to work in the city before buying property. New home transactions in Shenzhen have fallen for five straight weeks, according to official data for the period ending April 3, with primary market transactions for the week ending April 3 tumbling 16 per cent from the preceding week. However, luxury housing sales continued to grow rapidly. New high-end apartment sales in March rose 35 per cent month on month to 725 units. That accounted for 14 per cent of the total new home market, the highest so far this year, data from property agency Centaline showed. With increasing policy risk, capital had flowed to luxury projects “which were more capable of preserving value”, Centaline analysts wrote in a report last week, adding that “capital is smart”. Nevertheless, the new policy tightening has taken some of the heat out of luxury project prices. The prices for The Peninsula phase three were set below market expectations, with a nearby project, Shuangxi Garden, having sold for an average of 125,000 yuan per square metre. The average selling price of high-end apartments eased slightly to 81,825 yuan per square metre in March, Centaline said. “The tightened policy would have some impact on the market in the short term, especially transactions for second-hand homes,” said Du Jinsong, head of Asia property research at Credit Suisse, adding that home prices in the second-hand market had seen the most frenzied growth in the past year. But Du remains positive about overall home price growth in Shenzhen in the longer term as the undersupply of new homes was difficult to change. “As long as the easy monetary environment continues and there is no other good asset to invest in, money could only be put into the property market,” he said.