By Lin Guan (chinadaily.com.cn)
Updated: 2007-08-10 17:30

As the Shenzhen government tightened control on the residential property market, analysts predicted housing prices to drop by as much as 30 percent at the end of the year, China Business Times reported.

In July, new housing prices in the city have already fallen by 5.8 percent. A vice manager of Centaline China’s Shenzhen branch, a real estate broker, said the second hand house market will be in a stagnant period until the end of the year because house holders are likely to lower prices only slightly and buyers keep their wallets tight. However, sellers will eventually give in to increasing pressure as supply rises and sell their houses at lower prices.

Moreover, a 20 percent tax on the cost difference between selling and buying is likely to begin in Shenzhen after August 1. The local government will decide the cost difference as it uses the evaluated selling price as a reference. This is likely to put an end to the 20-year-old false contract history of avoiding taxes, which has partly pushed up the city’s property prices.

Statistics showed in July, Shenzhen’s new house and pre-owned house prices fell by 5.8 percent and 3.6 percent respectively from a month earlier. And the city’s house sales volumes also decreased .

Because supply of residential property increased drastically in July, half of the city’s new houses have not been sold. Their average selling price was 13,757 yuan (US$1,819), a 5.8 percent decline from last month.

The second hand housing market also shrank by 50 percent in July.

Experts said concerns about stricter measures from the government and the fall of second hand housing prices, in addition to the rising threshold of bank loans, are cooling down the Shenzhen real estate market.