Shenzhen raises supply of new homes as China’s tech hub moves to curb surging house prices

Shenzhen plans to drastically increase the supply of new housing this year, as it ramps up efforts to curb a rapid gain in home prices amid nascent signs of an asset bubble emerging in the post-pandemic period.

The city is set to make a further 69,350 flats available by the end of 2020, a significant increase from the 50,434 on sale at the end of May, according to the Shenzhen Housing and Construction Bureau. It is the first time Shenzhen’s housing authority has released the data, a move seen as a way to increase transparency and rein in speculative home purchases.

Pressure on the local government has been building, after the technology hub’s home prices spiked when local banks opted to extend more loans and the local government eased some property restrictions. Shenzhen’s second-hand housing prices jumped 10 per cent from a year earlier in April, far outstripping an average gain of 0.4 per cent in the 70 major Chinese cities tracked by the statistics bureau.

Prices in Shenzhen’s Nanshan district, home to such technology juggernauts as Tencent Holdings and ZTE, surged even more, by 16 per cent in the same period.

As Beijing has unleashed a record amount of loans into the economy this year to combat the damage caused by the coronavirus epidemic, top policymakers are wary of excessive liquidity leading to a potential asset bubble. The official tone towards the property market remains stern, with Premier Li Keqiang and the Chinese central bank reiterating previous warnings that housing should not be a speculative investment.

The move in Shenzhen may mark a shift by the government in how it will respond to rising home prices in the future, with policymakers seeking to raise supply instead of curtailing demand, which typically has a fast detrimental effect on market sentiment.