Shenzhen has followed in the footsteps of Chongqing and Shanghai in using measures to curb increasing home prices.
The imposition on new flat prices of an average cap of 22,000 yuan (HK$26,190) psm has made Hong Kong’s neighbour the first second-tier mainland city to regulate real estate speculation.
Home prices at certain locations in the city and certain kinds of properties will likely face separate regulatory caps.
One of the new policies that has already been launched in Shenzhen is that developers are not permitted to pre-sell new luxury homes. Only homes that have already been completed can be released on the market.
“Many luxury homes have yet to obtain pre-sale approval,” said Wang Shijie, Director of Centaline Shenzhen. “Some projects costing over 50,000 yuan psm were recently stopped by regulators.”
Peter Choy, Senior Vice President at Moody’s Investor Service, noted that various property curbs are expected to affect developers.
“We anticipate the proceeds from contracted sales of residential properties will decline by an average of 25 to 30 percent in first-tier cities and in most second-tier ones,” Mr. Choy said.
But home prices are not expected to drop by more than 20 percent, he continued.
In its monthly survey, China Index Academy said Shenzhen ranked first in the country in home prices with an average 25,253 yuan psm in March. Shanghai came in second spot with an average 23,586 yuan psm while Beijing placed third with 22,893 yuan psm.