Golden September in Shenzhen

September to October has always been the yearly high season for China’s property market, with the market calling the period “Golden Sep and Silver Oct”. This year’s Golden Sep has passed as September came to an end and now is the time to take a look at the market’s performance. The record shows that transactions have fallen over 30% y-o-y in the period in the primary market of Shenzhen, one of the four First-Tier cities of China, while transaction prices, on the other hand, surged over 70%. Transactions in the secondary market have also fallen 36% y-o-y.

The city’s Urban Planning, Land and Resources Commission’s record shows that 2,618 first-hand homes were sold in September, rising 13.2% m-o-m but falling 35.5% when compared to last year’s record. Average transaction price recorded in the month was RMB 61,600 per sqm, showing a 6.7% m-o-m increase and an over 70% y-o-y rise. Meanwhile, 7,722 transactions were recorded in the secondary market, sliding 2.3% m-o-m and dropping around 36% from last year’s record.

Yet, it is important to bear in mind the effect of the 3.30 policies implemented at the end of March 2015, where down payment required for second home purchase was dropped to at least 40% and capital-gains tax exemption was extended to include sellers who have owned their home for as little as two years, rather than the previous five-year minimum. Comparing this year’s transactions to 2014’s and controlling the effect of 3.30 policies, we can still see a 15.9% fall from 2014’s 3,113 transactions in the primary market. Yet, transactions were up 74.2% in the secondary market.

Among all the regions in Shenzhen, Longgang district saw the most primary transactions in September, recording 1,094 transactions in the period, while Baoan district followed with 1,015 transactions. Longgang and Baoan also had the most transactions in the secondary market in the month, with 2,030 and 1,721 transactions respectively. An interesting point to note is that Longgang is still the cheapest region in Shenzhen, with an average primary transaction price at around RMB 40,740 per sqm.