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Guangdong / Business

Shenzhen's property market slumps 8% in July

By Zhu Lingqing (chinadaily.com.cn) Updated: 2016-08-03 14:16

Shenzhen's property market slumps 8% in July

Cityscape of downtown areas in Shenzhen, South China's Guangdong province, May 26, 2016. [Photo/IC]

Shenzhen's average new housing price fell to 56,720 yuan ($8,555) per square meter in July, down 8.2 percent from the previous month, the sharpest month-on-month decline since 2012, according to the transaction data released by the Urban Planning, Land and Resources Commission of Shenzhen Municipality.

The city recorded slump in sales of both first- and second-hand houses in Shenzhen, indicating that the market is facing a downturn as high priced plot's short-term stimulus effect gradually fades, coupled with the off-season effect.

"Attention should be paid to the changing relations between policy change and price in the second half of the year," said Zhang Xiaoduan, director of the property services provider DTZ/Cushman & Wakefield's South China and West China research department, according to a report by China Business News.

He said Shenzhen's property market is expected to stay stable without any sharp increases in the second half of this year.

At this stage, Shenzhen's property market is mainly driven by new homes. However, the supply of new houses in July remained at a low level with only four residential projects with 2,164 set of residences covering 229,500 square meters obtaining pre-sale licenses.

The number of new homes launched in the market in July was 1,559 units, down 14 percent from the previous month. As the market entered the off-season of July and August, buyers' wait-and-see mood has affected developers' sales plan. Although overall the average monthly licensed sales volume was 3,500 units in the first seven months of this year, only 2,150 of them were put into the market, less than half of last year's average level.

The fall in supply was due to the depressed trading volume. A total of 2,984 set of new homes were sold in July, dropping 8.3 percent month-on-month, covering 309,999 square meters, down 10.8 percent from the previous month, according to Urban Planning, Land and Resources Commission of Shenzhen Municipality.

Buyers were still focusing on housing prices, according to a report of Centaline Property in Shenzhen. Driven by several property projects in the city's Nanshan district, the price of mansions rose to more than 60,000 yuan per square meter, which obviously influenced the structure of July's property sales deal as the mansion sales contracts signed decreased significantly.

The sales volume of second-hand houses in July reached 7,500 units, falling about 60 percent from last year, according to statistics from housing agent Lianjia. The buying behavior is quite rational since most buyers are first-time owners who buy houses for basic needs or long-term investors.

"The short-term expectations driven by high-priced land has influenced second-hand price offer, which has lead to the price's fluctuation," said Centaline Property in Shenzhen.

The average sample price of a second-hand house remains at 55,247 yuan per square meter at this stage, lacking the downward pressure in the short term.

Zhang Dawei, chief analyst at Centaline Property, said sales volumes in first-tier cities have slowed down and land and housing prices in some hot second-tier cities are leading the increase.

"Once the credit easing policy is tightened, the risks in real estate market will break out in the second half of the year, especially in the fourth quarter," he said.

At a national level, the commercial residence sold in the core 54 cities in July covered 292,000 square meters, dropping 7.4 percent month-on-month in sales volumes, according to Centaline Property.

In addition, the difficulty of destocking has increased with the rise of hoarding phenomenon driven by the frequent appearances of high-priced lands.

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