Dras­tic fall in Shen­zhen homes prices ruled out

New prop­erty deals in steep de­cline as tough hous­ing curbs bite and in­vestors look over­seas

China Daily (Hong Kong) - - HK | BUSINESS - By ZHOU MO in Shen­zhen sally@chi­nadai­lyhk.com

As proper ty de velop­ers and spec­u­la­tors in Shen­zhen strive to weather a “freez­ing win­ter” amid harsh gov­ern­ment poli­cies and a weak­en­ing yuan, an­a­lysts ex­pect the mar­ket to re­main gloomy in 2017, but aren’t wor­ried about a sig­nif­i­cant fall in homes prices.

The in­tro­duc­tion of what’s be­lieved to be the tough­est hous­ing curbs in his­tor y in Oc­to­ber has damp­ened the city ’s red-hot proper ty mar­ket. It was fol­lowed by a series of gov­ern­ment mea­sures, in­clud­ing rais­ing the ra­tio of down pay­ments for those who have sec ured loans through the hous­ing prov­i­dent fund and in­ten­si­fy­ing the crack­down on il­le­gal in­dus­try prac­tices, all of which have added to the chill.

Last month, the trans­ac­tion vol­ume of new homes in Shen­zhen de­clined to 2,922 units — down more than 30 per­cent from a month ear­lier — ac­cord­ing to Cen­taline Real Es­tate Re­search.

Prices of new apart­ments had shrunken by 10 per­cent to 54,986 yuan ($8,000) per square me­ter last month since the re­stric tions were en­forced.

Ma ny p o t e n t i a l b u y e r s have cho­sen to stay on the side­lines, wait­ing for what they see as an “ap­pro­pri­ate” time when prices are deemed r e a s o n a b l e . Inv e s t o r s a n d spec­u­la­tors are also leav­ing the mar­ket as likely fur­ther de­pre­ci­a­tion of the ren­minbi has prompted them to seek greener in­vest­ment pas­tures else­where.

The sit­u­a­tion is most dis­tinc­tive in Shen­zhen’s cen­tral Fu­tian and Nan­shan dis­tricts, where the num­ber of in­vestors is the largest among all ar­eas in the city. The two dis­tricts saw the big­gest drop in prop­erty deals since the hous­ing pol­icy took ef­fect — down 8.9 per­cent and 8.3 per­cent, re­spec­tively — last month.

“Due to the re­cent ren­minbi de­pre­ci­a­tion, many in­vestors are shift­ing their fo­cus to over­seas real-es­tate projects, cast­ing a neg­a­tive ef­fect on Shen­zhen’s prop­erty mar­ket,” said Zheng Shu­lun, gen­eral man­ager of Shen­zhen Cen­taline Prop­erty.

“It’s ex­pected that en­thu­si­asm for i nvest­ment i n Shen­zhen prop­er­ties will keep wan­ing, and homes prices will con­tinue to drop in the com­ing year. The ex­act sit­u­a­tion has to be seen to­gether w i t h t h e c o u n t r y ’s f u t u r e mone­tary pol­icy and how the global pic­ture de­vel­ops.”

Song Ding, di­rec­tor of the To u r i s m a n d R e a l E s t a t e In d u s t r y R e s e a r c h C e n t e r at the China De­vel­op­ment In­sti­tute, a Shen­zhen-based think tank, said Shen­zhen’s prop­erty mar­ket is ex­pected to re­main gloomy next year with the cur­rent re­stric­tions in force, but the range of price drops “may not be that large as some peo­ple ex­pect”.

“Right now, many peo­ple are adopt­ing a wait-and-see at­ti­tude, and may act when prices come down to a cer­tain level. This will lead to com­pe­ti­tion (among po­ten­tial buy­ers),” he said in an ar­ti­cle on his WeChat so­cial plat­form.

“In this case, I be­lieve that the price drop in Shen­zhen proper ties may not be as

It’s ex­pected that ... homes prices will con­tinue to drop in the com­ing year. The ex­act sit­u­a­tion has to be seen to­gether with the coun­try’s fu­ture mone­tary pol­icy and how the global pic­ture de­vel­ops.”

di­rec­tor of the Tourism and Real Es­tate In­dus­try Re­search Cen­ter at the China De­vel­op­ment In­sti­tute

per­cent

fall in the prices of Shen­zhen’s new apart­ments in Novem­ber since the curbs were im­posed

large as some peo­ple think. The mar­ket will pro­duce the fi­nal re­sults.”

Prices of sec­ond-hand homes in Shen­zhen had lost 8 per­cent last month to 54,670 yuan per square me­ter.

PARKER ZHENG / CHINA DAILY

The trans­ac­tion vol­ume of new homes in Shen­zhen de­clined more than 30 per­cent from a month ear­lier, ac­cord­ing to Cen­taline Real Es­tate Re­search.

Song Ding,

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