China’s hottest real estate market freezes over as February home sales plunge 80 per cent amid a dearth of transactions during coronavirus outbreak
- Technology hub reports 1,667 sales of lived-in homes in February, down from 7,499 units and 10,000 units in January and December
- Hard to see when the market will bottom out, Midland Realty says
Shenzhen, mainland China’s hottest property market last year, has seen an 80 per cent decline in home sales amid the coronavirus epidemic, Hong Kong brokerage Midland Realty said.
The technology hub reported 1,667 sales of lived-in homes last month, down from 7,499 units and 10,000 units sold in January and December, respectively, the brokerage’s research unit said.
The city, often referred to as “China’s Silicon Valley”, reported a boom in home sales after being earmarked by Beijing in August last year as a new special economic zone where wide-ranging reforms would be carried out. The total number of transactions rose by 30 per cent between August and December, as buyers and investors bid big on its future prospects.
“We expected that the policies favouring Shenzhen would lead to robust sales until April this year. But this has stopped abruptly because of the coronavirus [outbreak], and it is hard to see when the market will bottom out,” said Fion He, director of Midland Realty’s research unit.
Chinese developer offers biggest ever discounts as virus cripples home sales
Developers have had to shut their sales centres since January. And market observers said they did not foresee the buzz generated by the property market in Shenzhen – as well as in the other eight mainland Chinese cities included in Beijing’s Greater Bay Area development plan – being replicated when a countrywide lockdown eventually lifts.
“The overexcitement has passed. Buyers who rushed to get properties before they got too expensive will now like to wait,” said Yan Yuejin, director of property research and data provider E-house China R&D Institute.
Ma Qiaodong, a Shenzhen homeowner, was worried he had missed the opportunity to sell a flat at the best possible price. “Finding a buyer is not a problem, but I might have to lower my price [further],” said Ma, who was told by his agent that three potential buyers who had showed interest before the Lunar New Year holiday had walked away. He has already cut the asking price for the 70 square metre flat in the city’s Luohu district by 8 per cent, or 300,000 yuan. The unit is now available for 3.2 million yuan.
Property markets reel from coronavirus outbreak as investors pause transactions
The Covid-19 outbreak has also limited home purchases by Hongkongers in Shenzhen. Buyers from the special administrative region doubled their purchases in the second half of last year, according to Midland Realty. Such transactions were boosted in November last year, after Beijing cut red tape for homebuyers from Hong Kong and Macau purchasing properties in Shenzhen.
“Less than 10 units were sold to Hong Kong buyers in February, as it is too troublesome for them to cross the border,” He said. All travellers from mainland China entering Hong Kong, including local residents, have been required by the government to go into quarantine for 14 days since February 8.
