Shenzhen homebuyers look forward to cheaper apartments after city lowers cap on land and home prices
- The city’s government has cut its asking price for 22 lots of land by US$1.9 billion
- Intervention is being viewed as signalling a swing away from a market-driven housing sector to one that is controlled by the state
Homebuyers in Shenzhen, China’s technology hub, are looking forward to cheaper prices after the local government cut its asking price for land by 12.7 billion yuan (US$1.9 billion).
The sale of 22 lots of land slated for August 9 was called off by the government, and when it was rescheduled for September 28, the cap on the price of each site and the homes to be built on these lots had been lowered.
“In theory, home prices should go down when land prices are becoming cheaper and the capped home prices are lower. I am hoping for this, as it will allow me to buy a home in this city,” said Crystal Tan, who has been working in Shenzhen for a couple of years now. She and her husband are hoping to buy a home and have a budget of 4 million yuan.
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The Shenzhen government’s intervention is being viewed as signalling a swing away from a market-driven housing sector to one that is controlled by the state. China’s property sector has come under particular scrutiny as the ruling Communist Party marks its centenary and prepares to head into a crucial conclave process to select its next crop of leaders.
Moreover, Chinese President Xi Jinping, who has declared that homes are for living in and not for speculation, recently emphasised that affordable housing was a key tenet of his pursuit of “common prosperity” in China.
The Shenzhen government’s intervention “rules out” the possibility of a further bounce in home prices, said Li Yujia, senior economist with the Real Estate Assessment and Development Research Centre, a research unit of the city’s government.
The price of a plot in the city’s downtown Baoan district was cut by the most. The government has set the maximum bidding price at 7.3 billion yuan, 1.9 billion yuan – or about 20 per cent – lower than that only two weeks ago.