Shenzhen property market slows down in 2010

Uncertainty over policy in real estate is having its effect on both buyers and sellers across China.

Down south in Shenzhen,a boom last year drove prices up from 11,000 to 20,000 yuan per square meter in just 12 months. While transactions more than tripled. But the current mood has changed. Buyers are waiting to see if authorities launch more policies that will affect prices. While developers are offering discounts, with little effect so far.

Peninsular City Garden, a luxury property project in Shenzhen, sold nearly 2,000 apartments last year. Prices for those units rose from 10 thousand to 30 thousand yuan per square meter. But since the beginning of this year, far fewer customers have come to see the apartments.

A sales agent of Worldunion Property, said, "We've see fewer transactions recently. Those who are interested in buying are waiting to see whether the government will issue new policies."

Most investors feel that there are many risks at the moment.

Investor Zou Jianmin said, "I do not want to buy now. For investment, rental rates should be more than mortgage payments. For short-term investments, the market should see active transactions. Now is not a good time. "

Customers are waiting while developers are trying to sell more. A dozen new projects have hit the market. Various discounts are now being offered.

In the first week after the New Year, 800 units were sold, down 20 percent compared to the previous week. Meanwhile, prices dropped by 15 percent during this same time period.

In past years, Shenzhen's property market has been a leading example of the up and down trends of the country's property market. In the 2008 market adjustment, Shenzhen saw deeper adjustments. During the 2009 housing price hike, Shenzhen housing prices started rising first and rose to its record 30-year high.

Insiders say 70 percent of people in Beijing and Shanghai are living in their own houses, while only 33 percent of people in Shenzhen are doing so. This suggests potential demand for the future. But the increasing speed of price hikes has for the time being, muted this demand. The decline in transactions suggests an inevitable adjustment in 2010.