Shenzhen 'freeze' puts lid on home prices
Shenzhen's homeowners have seen a decline in the value of their properties after the local authorities enacted a series of regulations to rein in the runaway market, but industry pundits remain split over whether prices will remain stable in the long term.
The transaction volume in the city's pre-owned-housing market plummeted by more than 80 percent year-on-year in July - remaining to be under 3,000 units for the consecutive months - according to Centaline Property.
The Southern Metropolis Daily reported that prices of pre-owned homes in July fell by 5 percent, compared with the previous month, having dropped for the fifth consecutive month this year. The downward trend has exerted immense pressure on real estate agencies. A survey by the Shenzhen Real Estate Intermediary Association last month estimated that about 500 property agencies had closed down so far, accounting for 10 percent of the city's total number.
"The decline in housing prices shows that market control and the continued enforcement of regulations has worked," said Li Yujia, chief researcher at the Guangdong Housing Policy Research Center.
The comprehensiveness of the latest round of regulations is unprecedented, he said.
The Shenzhen municipal government has introduced a series of measures this year to check property speculation, such as setting guidance prices on pre-owned homes in February and cracking down on business loans that have been misused to buy homes.
Li said that both homeowners and potential buyers have adopted a wait-and-see attitude, sparking a drop in the housing supply. But what's more important is whether speculation could be contained in the long term, he said.
Curbs on housing loans have been cited as a critical factor fueling the recent price slump. "But this is just a short-term measure. We need to enforce a long-term mechanism," he said.
Centaline described the decline in Shenzhen's existing-home market as a "freeze period". It said only 28,442 pre-owned apartments were sold in the city in the first half of 2021 - a year-on-year fall of 35 percent and accounting for 30 percent of last year's total number of units sold.
Yan Yuejin, director of E-house China Research and Development Institution, said prices of Shenzhen's pre-owned homes had shrunk by 15 percent from 72,436 yuan ($11,210) per square meter in January to 61,500 yuan per square meter in June.
Ningbo in Zhejiang province, Chengdu in Sichuan province, and Xi'an in Shaanxi province have also adopted guidance prices for pre-owned homes this year, causing a stagnated growth trend, Yan said.
He foresees more cities following suit by launching new measures in the near future.
Song Ding, director of the Tourism and Real Estate Industry Research Center at the China Development Institute, described Shenzhen's move to continue increasing housing supply on a large scale as "revolutionary". He believes it is the most fundamental step taken to stabilize the city's property market.
The Shenzhen Housing and Construction Bureau said in July that the city's residential land supply last year reached 362.8 hectares - 23.7 percent more than its previous plan.
For this year, about 60,000 new apartments and 40,000 public housing units will be completed, it said.
