Shenzhen’s average transaction price for new homes has beaten both Beijing and Shanghai in June, making the city the priciest city in the whole country. According to the latest statistics released by the Urban Planning, Land & Resources Commission of Shenzhen Municipality, Shenzhen’s average transaction price in the primary market has reached RMB 61,756 per sqm in June, rising 10.6% m-o-m and 101% y-o-y. Shenzhen’s prices have already risen around 45% in the first half of the year and its average square footage price of RMB 61,756 has well-surpassed Beijing’s RMB 36,259, making it the most expensive city in China.

One of the reasons why Shenzhen’s prices are rising so rapidly is for the fact that Shenzhen, when compared to the other 3 Tier-One cities, is much smaller, with little to no rural area, which could bring average prices down. In addition, many of the projects launched in 1H2016 are luxury developments, such as The Peninsula and The Icon launched in the period, pushing average transaction prices further up.

An important point to note is that, although Shenzhen has remained the city with the highest y-o-y growth in prices among the studied 100 cities, according to a research report, Shenzhen’s m-o-m growth are lagging behind several Tier-Two cities and that its m-o-m price increase has been slowing down.

In the secondary market, prices had first dropped, following an 18-month price rise, in the first month of the implementation of the 325 cooling policy. Although prices have went up in recent months, the price rise has not regained its momentum and has remained at around 1% in both May and June.

Yet, the Shenzhen property market has been stimulated by several pieces of good news in June. On 2nd and 8th June, 2 plots were sold for the very high prices of RMB 8.289 billion and 14.06 billion, with accommodation value reaching RMB 56,800 and RMB 27,600 per sqm respectively. In addition to the high land prices, mortgage rates for Shenzhen’s first-time buyers has been falling since the implementation of the cooling measures in March (for example the Ping An Bank has offered a 18% discount for some qualified Shenzhen first-time buyers on their mortgage loans). Together with the opening of some Metro lines, some estate agents have pointed out that price rises have been seen in the market at the end of June, with total transactions rising 30%-40%. Looking ahead, 10 new projects are set to be launched in July, with prices starting from RMB 35,000 per sqm to RMB 100,000 per sqm.

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