Shenzhen’s June home prices drop for ninth month as buyers shift focus to outlying suburbs
More first-time buyers are buying homes in suburban areas, dragging down average prices
Residential property prices in Shenzhen, the hottest market in China last year, declined at a slower pace in June, as local authorities arm twisted developers into selling new projects at below market rates, while buyers shifted gear and turned their attention to the city’s outer suburbs from the core urban area.
June’s average prices fell for the ninth consecutive month, dipping 0.04 per cent from a month earlier to 54,492 yuan(US$8,032) per square meter, according to data by the Urban Planning, Land & Resources Commission. Still, a record 2,953 transactions were recorded in June, with 80 per cent of them taking place in the districts of Bao’an and Longgang outside the city centre, according to data by SZ Home, a local property portal.
“A key reason for Shenzhen’s suppressed new home prices is that the local government controls the pricing of new projects, so a lot of new homes are sold under market price,” said Andy Lee Yiu-Chi, vice-president of Centaline Property Agency’s China business.
The price control is part of a government package since October 2016 to prick a property bubble and cool the market. Under the policies, buyers of Shenzhen property must show proof that they’ve paid social security in the city for five consecutive years, a tougher standard than the previous requirement of three years. The definition of “first time buyers,” eligible for more favourable buying terms, have also been toughened.
The secondary home market was little changed in Shenzhen during the month, with 6,343 units pre-owned units changing hands in June, comparted with 6,283 units in May, as buyers and sellers waited on the sidelines for the market to digest the latest market-cooling policies.
Wu Shan, a 30-year-old employee at a foreign company, is one of those buyers who’s still waiting on the sidelines. She’s been looking for a new home in the city since 2016, and has been receiving numerous phone calls from agents.
“It means the property market in Shenzhen is now on a downward trend,” said Wu. “Prices are down, according to these agents, but I think there’s still room for further reduction. I will wait for a few more months to see how the market goes.”
With additional reporting by Li Tao in Shenzhen.