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Shenzhen
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Shenzhen toughens local residency requirements to douse ‘violent surge’ in China’s hottest residential market

  • Shenzhen pours cold water on red-hot residential market amid a 41 per cent jump in transactions this year
  • Local government analyst predicts prices are likely retreat in the second half, but will not plunge

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An aerial view of Shenzhen in the Greater Bay Area, home to Tencent, ZTE and DJI and other home-grown technology behemoths. Photo: Martin Chan
Pearl Liu
Shenzhen has tightened rules on home purchases by introducing additional residency and tax requirements to douse a “violent surge” that turned China’s Silicon Valley into the hottest property market in the country.
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Residents with hukou in the south-eastern city bordering Hong Kong will be only be allowed to buy a home if they have held the so-called local household registration paper for more than three years, according to a statement published by the Housing and Construction Bureau on Wednesday. Families will be restricted to owning two homes, while singles to one, it added.

Besides, they are also required to show proof of their income tax or social security payment history for three consecutive years in the city, according to the statement. The three-year residency rule does not apply to those without a hukou, who are currently required to pay more than five years of social security funds to qualify for the right to buy a home in the city.

Shenzhen’s residential market is springing back to life from a coronavirus-induced slump earlier this year, as a 41 per cent surge in transaction volume in the first half makes it the costliest among all mainland cities. Prices in Shenzhen have risen 12 per cent on average in the past year through May, outpacing gains in 70 major Chinese cities tracked by the National Bureau of Statistics.

“The cooling measure is stricter than expected,” said Li Yujia, senior economist with the Real Estate Assessment and Development Research Centre, a research arm of the city’s government. “It shows that top officials are not happy with what is going on in Shenzhen.”

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