Why easing of Shenzhen housing market policies may lift sentiment but is limited

Data tracked by Centaline, one of the main property agencies in Shenzhen, shows that viewings of second homes rose by 24 per cent week on week on the first weekend – November 25 and 26 – after the easing.

Website views by buyers looking for second homes surged by 200 per cent last week compared with the previous week, Cheng said, adding that enquiries were increasing as well, although by not too much.

However, the easing of property policies is more likely to increase expectations of lower home prices rather than spurring actual demand, agents said, despite the more aggressive stimulus by China’s tier-one cities. The easing in Shenzhen comes after Guangzhou, another tier-one city, cut down payments by almost 30 percentage points to 40 per cent in September.

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“The policy merely lures home upgraders who have spare money to purchase another home,” said Cao Jiayong, an agent in Shenzhen. “Some had to sell their old homes to buy a new one during the country’s economic downturn before the easing of policies.

“But now it’s easier for them to make down payments for a second one.”

The easing will not spur the overall market, because it is still difficult for the vast majority of Shenzhen residents to buy a second home, Cao said.



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“[Right] now, this is a buyer’s market in Shenzhen,” said Andy Lee, Centaline’s China CEO. “More homeowners are urgently selling, rather than buying another home.”

Such policies have certain positive effects in lifting market sentiment, but are still limited or could be offset soon, as an uncertain economic environment remains a major concern among homebuyers, Lee said.

“They chose to wait and see as they are looking forward to more eased policies and big discounts, because what they have been observing are lower and lower prices. And for these upgraders, the risk is – what if I cannot successfully sell my existing home when I buy a second one?”

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Shenzhen had 58,071 units up for sale in the second-hand homes market as of November 27, an addition of 51 homes from the previous week, according to the Shenzhen Real Estate Intermediary Association.

Shenzhen, one of the cities with the most expensive housing markets in mainland China, has seen prices decline over the past year. The average new home prices in the city have fallen 1.9 per cent for the first 11 months, according to data compiled by the China Real Estate Index System (CREIS).

In November, Shenzhen’s average new home prices fell 0.59 per cent month on month to 53,075 yuan (US$7,450) per square metre, worsening from a 0.12 per cent decline in October and 2.19 per cent lower when compared with last year, CREIS data shows.

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Nationwide, China’s top 100 developers in terms of sales saw home sales values fall 0.6 per cent month on month to 440.2 billion yuan in November, down 29.2 per cent compared with last year, according to CREIS data.

The sales figures came as Chinese authorities rolled out a package of relief measures in big cities. These measures ranged from lower mortgage rates to reduced down payments, and were introduced in September to bolster a beleaguered property market.

A post on social-media platform Xiaohongshu that discusses whether Shenzhen’s new housing policy is positive enough was commented upon more than 500 times, with many comments taking a pessimistic view as far as the policy’s effectiveness in reviving the market is concerned.

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“I believe many Shenzhen residents have a similar situation as mine – they got married and bought a home in [the neighbouring cities of] Huizhou or Dongguan during the pandemic,” one of the commenters said.

“It’s not a big issue to make another home down payment in Shenzhen for us, but we dare not take the burden of home loans for 30 years,” the commenter said. “It means I can’t lose my job or have a serious illness. I can’t imagine a life with mortgage and having a baby at the same time.”

Overall, market sentiment was weaker in November in several cities, a report from CREIS said. “Looking forward, the prices of second-hand homes are expected to continue declines, which would make more homebuyers turn to second-hand housing and weigh on the new home market.”

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