Shenzhen housing sales fall, prices remain high

11:00, June 03, 2010      

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Sales volume for residential housing in Shenzhen fell sharply last month but the average price remained unchanged as developers and buyers maintained a wait-and-see attitude in response to tighter government regulations.

New housing sales fell 43 percent in May compared with April, with 1,386 new apartments being sold last month. The average residential housing price was 20,238 yuan (US$2,976.18) per square meter in May, only 329 yuan lower than a month earlier, official figures show.

“Potential homebuyers hoped property prices would fall even a little when the government took more effective tightening measures, while Shenzhen developers don’t have much capital and did not cut prices sharply,” said Xiao Xiaoping, head of Shihua Real Estate research center.

According to the Shanghai Securities News yesterday, however, the nation’s property developers would experience financial difficulties in the future as the liability ratio of 13 of China’s top 50 listed developers had already exceeded 70 percent.

A report released by China Real Estate Appraisal (CRA) on Tuesday indicated that centrally administered State-owned property developers had fared better than other enterprises amid the tightened government measures, the newspaper said.

Last week, the Shenzhen-based Kaisa Group dropped prices by an average of 20 percent for three residential properties to promote sales and half the apartments were sold in one day. Xiao predicts temporary discounts of 10 percent will be adopted by a small number of developers in June, but doubts the average price will go down sharply because demand still exceeds supply in Shenzhen’s new apartment market.

China has restricted pre-sales by developers, curbed loans for third-home purchases, raised minimum mortgage rates and tightened down-payment requirements for second-home buyers. The National Development and Reform Commission recently announced plans for a gradual reform of the property tax system.

“Since there are no details of a property tax yet, such as how to collect the tax or how the tax will be levied, potential homebuyers can only wait and see,” said Xiao.

“Under the influence of tighter government measures, I believe speculators are leaving the housing market,” said Wang Shijie, head of Centaline Property’s research department.

Soource: Shenzhen Daily


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