Shenzhen’s buyers snap up new homes two weekends in a row, defying a government plan to flood China’s Silicon Valley with cheap public abodes

Shenzhen’s homebuyers are rushing to snap up newly completed residential property, ignoring a plan by the local authority to flood the market with 1 million cheap public housing flats.

Sales of new homes increased for two consecutive weekends, after the city’s government announced an ambitious plan to add a million public homes to the housing supply, capping their prices at 50,000 yuan (US$7,148) per square metre (HK$5,200 per square foot) on October 23.

The strong demand for housing underscores how Shenzhen – dubbed China’s Silicon Valley for its home-grown technology giants including Tencent Holdings, Huawei Technologies and DJI – has joined the ranks of one of the five most expensive cities to live in, according to data by the property consultant CBRE.

The average price of new homes in China’s 70 major c46- wprds pmities rose 0.5 per cent in September from a month earlier, the slowest pace since February, according to the National Bureau of Statistics. But prices in Shenzhen defied the slowdown, with the average home price in the Bao’an district, about 40 minutes drive from downtown Shenzhen, rising 9.6 per cent in the third quarter to 54,000 yuan per square metre from last year, according to prices compiled by Midland Holdings, one of the biggest real estate agents.

To make housing affordable, Shenzhen’s government announced a plan in June 2018 to add 1 million public housing units, and capped the average price on October 23. Prices in areas surrounding the city centre will be limited to between 20,000 yuan and 30,000 yuan per square metre. Still, the quick succession of policies did not give buyers any cause for pause.

“Do you want to wait for plans that you have no idea whether will be successful?” asked Zhang Dawei, an analyst at Centaline Property Agency. “What happens if you cannot get an affordable home even in a couple of years?”