Shenzhen's Property Market Continues to Climb

Following the Shanghai property market discussed in the last issue, we now look at another first-tier city in mainland China: Shenzhen. Firstly, Shenzhen's first quarterly fine tuning in housing policy is rather diversified. It is known that during the period from January this year to December 2021, the value-added tax on second-hand housing transactions in Shenzhen could be slashed by half. In addition, the mortgage rates for housing in Shenzhen have been significantly reduced since February. Approximately 13 banks in the city have lowered interest rates for first and second homes, 4% to 8% and 10% to 13%, respectively. In the same period, the ‘Outline Development Plan for the Guangdong-hong Kong-macao Greater Bay Area' was introduced, and once implemented, the impact of the plan will reach as far as 2035. In March, Shenzhen also announced the general plan for the comprehensive renovation of villages in the city, and created the village layouts for the coming five years.

In terms of sales, the total transacted area has increased by 3.9% quarter-on-quarter and 62.2% year-on-year to 1,811,221 square metres. The average housing price was RMB 56,101 per square metre, up 2.7% quarter-on-quarter, or 2.8% year-on-year. Amid more relaxed mortgage rates, decision making in first home buyers and upgraders has gradually accelerated. In terms of supply, the total floor space for new presale permits granted during the first quarter was at 631,019 square metres, a decrease of 68.7% quarter-on-quarter and a 3.7 times increase year-on-year. More than 65% of the new supply has been from the Longgang district, mainly comprising of two-bedroom units. Influenced by factors such as housing policy measures and price restrictions on new home sales, the overall new home sales price was stable at RMB 54,080 per square metre, flat quarter-on-quarter, and a slight decrease of 0.2% year-on-year. In the same period, second-hand housing sales were more active and the total transacted area was 1.6 times higher than with new homes. The sales volume of new homes fell to 683,861 square metres, down 4.9% quarter-on-quarter but up 21.4% year-on-year; second-hand home sales amounted to 1,127,360 square metres, down 1.9% quarter-on-quarter, or down 23.1% year-on-year. While the ratio of second-hand homes to new homes in the city was 1.6 times, the same ratio in the Luohu district was 19.6 times—the highest in the city. With further implementation of the goal of ‘non-speculative housing', the nature of housing investments has been weakening further, gradually bringing the property market back to reasonable levels and increasing confidence in buyers entering the market. The total transaction volume in 2019 is likely to rise further with overall stabilised housing prices.