A Bell Rings: Shenzhen Villa Price Drops 40pc

iFeng: 深圳一别墅跳水！长持4年降价630万，几乎半价却流拍，火爆楼市降温

Four years ago, more than 15 million bought real estate in first-tier cities. Four years later, they had a "blood loss" of 6.3 million auctions, but the auction failed twice. Recently, Alibaba's auction of a villa in Shenzhen on the Internet has attracted attention.

By itself it is an anecdote, but it is symptomatic of the cooling housing market in Shenzhen. In this specific case, the propterty is remote:

Industry insiders believe that no one is willing to accept the price cut by 6.3 million. It may be because the villa is located in Dapeng, the location is relatively remote, and the property was auctioned due to execution, and there may be potential risks such as the inability to close the house in time due to disputes after the auction.

As for Shenzhen, housing transactions fell nearly 40 percent in May:

It is not only the niche market like auctions, but under this round of strong regulation, as a key indicator of the local property market, the existing home sales volume in Shenzhen in May dropped again and again, down 40% from the previous month, which can be described as completely flat.

According to data from Shenzhen Centaline Research Center, the number of existing home residential transfers in Shenzhen in May was 3,027, down 37.9% from the previous month, and the number of units sold was the lowest since March 2020; the transaction area was 276,000 square meters, down 37.3% from the previous month.

...In terms of new homes, transactions in the new home market continued to decline in May. The new home market totaled 4566 commercial homes online, a decrease of 15.3% from the previous month; residential homes signed 2,677, a 23.6% drop from the previous month.

Credit growth has been slowing:

Housing loans are also tightening. Shenzhen Centaline Research Center pointed out that the major banks in Shenzhen currently accept business applications and processing for housing loans, and the qualifications for housing loans are strictly reviewed. With the exception of the Bank of Beijing maintaining interest rates in April, all major banks have basically unified mortgage interest rates, with the first set of interest rates rising by 45BP and the second set of interest rates rising by 95BP.

That's giving extra weight to regulatory policy:

In May, Shenzhen adjusted the household entry policy, raised the threshold for settlement and reduced qualified buyers; issued a notice on the sales price guidance of new commercial housing and commercial apartments, implemented "guidance prices" for new houses and launched a commercial housing pricing evaluation system to combat borrowing Decoration in disguised form of raising prices.

Controlling demand with one hand and increasing supply with the other, Shenzhen has begun to concentrate land supply and vigorously develop affordable rental housing.