Homes sales in Shenzhen's overheated property market went into a nosedive in the month after the authorities imposed what's seen as some of the tightest ever restrictions on homes buyers. Edmond Tang / China Daily

New residential property deals tumble 50% as projects stall and buyers stay put

Shenzhen's property market has cooled down sharply with transactions on new homes having plunged 50 percent since the latest housing restrictions came into effect a month ago in a bid to tame the city's runaway real-estate sector.

The tide may have turned, with industry insiders convinced that the market "temperature" will drop further as developers are forced to put the brakes on launching new residential projects and buyers opt to stay on the sidelines for the time being.

According to the Urban Planning, Land and Resources Commission of Shenzhen Municipality, just 2,674 new apartments, or 288,000 square meters, were sold in Shenzhen between March 25 and April 24 this year - the first month since the curbs went into force.

The volume was only half that of the previous month, but average prices were roughly the same - at 49,800 yuan per square meter.

Under the restrictions - seen as some of the toughest on record - buyers of second homes in Shenzhen who have paid off loans on their first property or have applied for mortgage loans within two years, are required to fork out a down payment of at least 40 percent of the purchase price, compared with the previous 30 percent.

Purchasers without Shenzhen household registration, or hukou, are allowed to buy only one property and must have paid tax or social security premiums in the city for at least three consecutive years instead of one year as in the past.

Developers are adopting a more cautious attitude, with some trimming their prices in an effort to get buyers. For property agents, the heyday seems to be over as they grapple to win deals - a far cry from last year's market frenzy when they were used to reaping a huge harvest like a walk in the park.

"I now get an average of 10 calls from property agents each day. It's a signal that their best days are behind them," Huang Wen, a 29-year-old office clerk in Shenzhen, told China Daily.

"When I went to a new residential project which opened for sale months ago near Bantian last weekend, there were very few visitors. A sales person even told me there was room for discussion on the price if I intended to buy."

Wang Fei, director of the Centaline Property Research Center in Shenzhen, said potential buyers have become "very sensitive" to prices after the new curbs were meted out.

"The latest restrictions have dampened buyers' enthusiasm to a large extent. They have become very sensitive to prices. New residential projects have reported good sales if they're cheaper. Otherwise, transactions were weak," she said.

On the secondary homes front, total transactions have also plummeted - by 64 percent to 6,793 units, or roughly 570,000 square meters - so far this month, compared with the previous month, according to Centaline Property.

The asking price for a 41-square-meter flat at Jingtian, Futian district, was cut by 50,000 yuan to 2.75 million earlier this month, while an 85-square-meter apartment in the same area went for 80,000 yuan less at 5.5 billion yuan, local media reported.

Song Ding, director of the Tourism and Real Estate Industry Research Center at Shenzhen-based think tank China Development Institute, said the new housing policies have had a significant impact on the overheated market.

He reckoned that the city's property sector is going through an adjustment phase, offering a big opportunity for those who had been priced out of the market.

sally@chinadailyhk.com

(HK Edition 04/26/2016 page7)