Pearl Delta property market overview - GuangzhouShenzhen’s property prices have risen the most out of China’s 4 Tier-one cities in 2015, while Guangzhou’s, also in the Pearl Delta region, have risen the least. Comparing to the over 50% price increase in Shenzhen, Guangzhou’s average prices have only risen about 10% in the period. Some suggests the relatively low price rise in 2015 provides more room for further price increase as the government continues its stimulus policy regime in the coming year.

According to the data collected, transactions have increased significantly since 2015 Q2 and because of the general fall in home supply in 2015, Guangzhou’s average inventory ratio has fallen from 2014’s 14 months to 2015’s below 9.5 months. Yet, despite the high amount of transactions, non-central districts of Guangzhou still have a relatively long inventory sales period compared to central districts as such areas have much higher level of supply. According to statistics, Huadu and Panyu districts still have more than 10 months of housing inventory, while central-districts’, such as Yueziu’s and Baiyun’s, ratio have fallen to below 6 months, with Tienhe’s also falling to similar level.

In terms of prices, prices for homes in the Yuexiu and Tianhe districts have risen around 10% in 2015 to over RMB 40,000 per sqm, while the prices in the adjacent Liwan district rose over 30% in the period to around RMB 34,000 per sqm. Further away from the central districts, where supply is higher, Panyu’s prices remain at around RMB 17,000 per sqm while having a relatively modest increase of about 7% last year.

And as home prices increase in Guangzhou, more land plots were put on sale while, at the same time, were sold at higher prices. In the year of 2015, 155 plots of land, amounting to a total of 6.9 million sqm, were sold in Guangzhou, with total transaction value reaching around RMB 95 billion in the period, representing a 12.6% y-o-y increase.

With its relatively moderate price increase, the shortening inventory ratio and the high-price land sales in 2015, the market expects Guangzhou’s home prices to continue rising in 2016. Besides the Tier-one cities of Shenzhen and Guangzhou, other cities in the Pearl Delta region are also well-developed and therefore providing investment opportunities, due to the region’s advantageous geographical location and its role in the country’s economic development. In the next issue of China Insight, more will be discussed on the property market of nearby cities.