Shenzhen: Developers Quietly Cut Prices, Speculators Dump Homes

Government policies aimed at slowing the housing market are finally biting following rate hikes and tighter credit conditions. In Shenzhen, a relatively new group of white collar speculators used consumer credit to buy near the peak. As credit tightens and prices drop, many will end up losing money after taxes, fees and interest.

iFeng: 房贷收紧后:开发商变相降价 炒房客闻风抛房
"Huaxia Times" reporter recently survey found that, in the weather-vane market of Shenzhen, the existing housing market has seen some eager investors begin to cut prices 10% to 20%, while developers have special room price cuts up to 10%.

...High leverage is one of the most important factors in high house prices. What happens if administrators reduce leverage?

Xu Feng believes that the future in the supply side, the new housing market does not rule out a small number of developers based on financial pressure will let prices drop, in the existing housing market speculators sitting on several homes may drop the price and exit, hopefully the housing market will gradually stabilize.

According to our reporter learned that the developers of Shenzhen have special room price of the situation, such as Kaisa City Square, last year the price of 50,000 yuan / square meters, the current price of 45,000 to 48,000 yuan / square meter. While other developers are still in wait-and-see attitude, because the price of the record by the government's strict control, the same real estate price record prices do not allow more than the previous price, since the second half of last year.

...According to the Shenzhen Municipal Planning Commission data, in September last year, the average new home price was 61,600 yuan / square meter, down to 54,931 yuan / square meter in January this year, down 7,000 yuan / square meter, in January 2017 Shenzhen new house turnover of only 1652 units, Month since the new month, decreased 23.6% mtm, down 70% yoy; existing homeg transactions 2747 sets, down 27.9% mtm, down over 80% yoy.
A new class of white collar speculators are feeling the pinch of tighter credit conditions:
Reporters found that the last two years to join the ranks of real estate speculators in Shenzhen, white-collar investors, are now under financial pressure, most of them used consumer loans and credit, or used a first home as collateral for a mortgage, to make a down payment on a second or third home. Especially investors who entered in the first half of 2016, they are stuck at the property market peak, including taxes and fees will sell at a loss.
Shenzhen home prices spiked nearly 60 percent in 2015 heralding the broader national bull market in 2016. As of December 2016, NBS reports Shenzhen new home prices were up 23.5 percent yoy and 49.5 percent from the start of 2015. Prices have been decelerating since mid-2016 and started falling month-on-month in October.

Some history:

June 2014: Shenzhen Vacancy Rate Estimated At 85%; Centaline Says Prices Will Be Cut in September and Last For 3 Years
July 2014: Shenzhen Existing Home Sales Plummet in June
August 2014: Shenzhen Nervous, Hosts Closed Door Meeting With Developers
A massive stock market bubble grows in the interim, with spillover into the Shenzhen housing market. The stock market bubble peaks in June 2015.
June 2015: Calls For Govt Intervention to Stop Home Price Increases in Shenzhen
June 2015: Shenzhen Sees Wave of Contract Disputes as Home Prices Soar 40% to 60%
July 2015: Beijing, Shanghai, Shenzhen Home Prices At New All-Time Highs
July 2015: Average Worker Needs 85 Years of Savings to Buy Home In Shenzhen
August 2015: Shenzhen Home Prices Rise 20% in Three Months, Some Beijing Developers Hiked 10-20%, Each New Project Opens 5% Higher
January 2016: CREIS: New Home Prices Rise 0.4% in January; Shenzhen Out of Control
January 2016: Shenzhen Banks Feel Pressure to Reign in Lending Amid Home Price Bubble
February 2016: Shenzhen Mulls Real Estate Restrictions, Raise Down Payment
March 2016: Beijing and Shanghai Consider Real Estate Restrictions; Shenzhen Hikes Transaction Tax
March 2016: Shenzhen's Credit Driven Housing Bubble; Shanghai Psychology Shifts
March 2016: Down Payment Loans Decline in Beijing, Shenzhen Investigates, Will Home Prices Fall?
June 2016: Shenzhen Crowns New Land King
October 2016: Buying Restrictions Working: Suzhou Prices Tumble, Shenzhen Buyers Disappear, Hangzhou Sales Drop
October 2016: Shenzhen Hikes Second Home Down Payment to 70pc

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