Industry leaders said that Shenzhen’s relaxation of its housing policies had an immediate effect of stimulating transactions, but they remain skeptical about its impact on reversing the longer-term downward trend.
The southern tech hub announced an easing of its housing policies on May 28, lowering the threshold for residents to purchase homes in the city, as the residential property market faces a downward trajectory amid slower economic growth and an industry downturn.
The new policies reduced the minimum down payment ratio for first-home buyers from 30 percent to 20 percent, and for second-home buyers from 40 percent to 30 percent.
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The latest policies introduced more favorable mortgage rates for homebuyers, with the commercial loan rate as low as 3.5 percent for first-home buyers and 3.9 percent for those purchasing a second home.
“The policies have had an obvious effect on Shenzhen’s housing market since their implementation a month ago,” said Li Yujia, chief researcher at the Guangdong Planning Institute’s residential policy research center.
“Transactions of secondhand homes in June have jumped to over 5,000, doubling the average monthly number recorded over the past two years, from the second half of 2021 through February this year. Given that a monthslong period after April is traditionally the offseason for homebuying, the performance is remarkable,” Li said.
Li said that one-bedroom apartments accounted for 13 percent of the total deals, while two-bedroom and three-bedroom transactions comprised 24 percent and 40 percent respectively.
“The fact that the proportion of one-bedroom and two-bedroom deals has increased indicates that more people with rigid demand have entered the market. This is a positive sign as they will help reduce the stock of existing second homes in the market. Homeowners who have sold their properties can then buy new ones, thereby creating a virtuous circle,” he explained.
The transaction volume of secondhand homes in Shenzhen grew 27.5 percent during the May 29 through June 25 period, compared with the April 29 to May 26 period before the policy was launched, data from Beike Research Institute shows.
However, Li noted that the market for new residential properties remains gloomy, with sales hovering around a historic low of 2,000 deals per month. He attributed the sluggishness to a mismatch between the demand for smaller, more affordable apartments, and the larger sizes of new apartments available on the market.
Zou Shaowei, a senior researcher at Shenzhen Centaline Research Center, said the stimulus effect of the latest housing policies has peaked and is expected to recede in the near future.
He pointed out that Shenzhen’s economy, highly reliant on imports and exports, and dominated by private enterprises, is vulnerable to external headwinds such as geopolitical tensions and global economic uncertainties.
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“While the economic fundamentals have not changed, the loosening of housing restrictions will not reverse the current downward trend,” he added, forecasting that the monthly transaction volume of secondhand homes in Shenzhen will fall to around 3,000 and that prices will continue to decline.
The National Bureau of Statistics reported that sales prices of new residential homes in Shenzhen dropped 7.4 percent year-on-year in May, while those of secondhand homes declined 9.2 percent in the same month from a year earlier.
Elsewhere, Beijing eased its housing policies on Wednesday, reducing the down payment ratio and mortgage rates, making it the last of the four first-tier cities in the country — Shanghai, Guangzhou and Shen-zhen are the others — to make the move.
