Shenzhen applies the brakes to its runaway property market
Shenzhen is introducing a series of measures to curb surging property prices, including raising the deposit requirement to up to 40 per cent of the value of the property.
Industry insiders say prices rose more than 20 per cent in the first quarter.
Although the measures revealed in a government proposal do no specify a new deposit level, real estate sources said the government intended to lift it to a maximum of 40 per cent for mass-market properties. Buyers of upmarket apartments who had previously owned property might be barred from taking out mortgages, the sources said.
The current downpayment requirement in the special economic zone is 20 per cent.
Other measures to cool the property boom include prohibiting developers from sitting on their land reserves and government moves to release more land.
The new measures are in line with a directive issued by the central government last summer on cooling the property market and are the first set of such rules to be released by Shenzhen.
Under the proposal, no more than 10 per cent of new land supply to be made available through auctions or bidding can be used for upmarket housing.
The government will also complete the construction of 430,000 square metres of accommodation for low- to middle-income earners in the first half of this year to relieve the housing shortage.
Transparency related to land supply, property projects and market trends will be increased.
Property prices in Shenzhen rose 20.6 per cent to an average 8,752.9 yuan per square metre in the first quarter.
The proposal does not spell out a timetable for its implementation, but industry sources said they expected the measures to be rolled out in the next two months.
Centaline China Shenzhen branch general manager Andy Lee Yiu-chi said the measures would have an impact on both homebuyers and speculators.
'The homebuyers will delay their [buying] plans and the speculators will think the cost of the investment has increased too much,' he said.
'The local government is quite determined [to cool down the property market].'
Mr Lee said the new measures, if implemented, could help contain the rise of property prices to between 10 and 15 per cent by the end of the year, which was a healthy level because it would be in line with the city's gross domestic product growth.
