Shenzhen showing early signs of property cooling, in week after latest buying curbs
Official data suggests transactions during “golden week” holiday, a traditional peak season for new home buying, fell 5pc to 508 units
Shenzhen, the country’s most expensive housing market, is showing early signs of a cooling in sentiment, after the introduction of new buying restrictions last week.
According to the latest official data, new home transactions during the “golden week” national holiday (October 1-7) – a traditional peak season for home buying – fell 5 per cent week on week to 508 units.
The city followed the capital Beijing, and some other cities, to announce tighter buying restrictions on October 4, in a bid to ease what had been seen as growing property bubbles.
First-time home buyers in the southern metropolis now have to pay as much as 50 per cent of the purchase price as a down-payment on new units, and those buying a second home need to stump up 70 per cent, up from 40 per cent previously.
Local residents can buy just one new unit in the city, while non-locals are only eligible to buy in Shenzhen if they have made social security payments for five consecutive years.
“The new measures are the strictest of all cities, and the strictest in Shenzhen’s history,” said Liu Feifan, a property analyst with Guotai Junan International.
South China Morning Post visited several Shenzhen project sales centres on Thursday, October 6, two days after the new tightening rules were introduced, and found buyers on site way out-numbered by uniformed sales agents.
“Business has been slow the past two days, and the launch of some new units have been postponed,” said Chen Junnan, a sales agent for Hongwan Garden in the city’s downtown Futian district.
The high-end apartment project, being developed by LVGEM (China) Real Estate Investment, has sold out six of its seven buildings, and is now accepting reservations for the remaining 160 units. But that sales launch date is still undecided, said Chen, although with plenty of bookings he added that selling prices are unlikely to fall.
The new units are expected to fetch 80,000 yuan per square metre, a 33 per cent rise on a year ago, and nearly 70 per cent higher than when the first units went on sale in late 2014.
Sales agents said they were already finding competition for customers intensifying.
At the front gates of Logan Property’s Acesite Mansion project, two rival groups of agents could be seen last Thursday, fighting over customers.
Average new home prices in Shenzhen have soared an incredible 42 per cent in the past 12 months to 55,001 yuan per square metre, according to data from China Index Academy, outpacing its larger rivals Shanghai or Beijing.
That growth has moderated in recent months, with prices edging up just 0.96 per cent in September compared with 2.05 per cent in August.
Liu anticipated transactions and prices may weaken after the new tightening measures, but the overall extent will be mild, he added, as supply in the city is still limited and demand strong.
A buyer surnamed Sun, from Taiwan but working in Shenzhen, said he will continue looking for a new property in the city, rather than back home.
“Although the mortgage rate in Taiwan is half that of Shenzhen, I am more optimistic about the future of Shenzhen,” he said.