(Yicai) March 27 -- Shenzhen's efforts to revitalize its property market are bearing fruit as visits and sales of second-hand housing are picking up but policy tweaks could wear out by next month without more comprehensive changes, according to insiders.

From Feb. 19 to March 19, the number of visits to second-hand homes listed by housing agency Leyoujia jumped to a three-year high, up by 17 percent from a year ago, according to data from the Leyoujia Research Center. Transactions surged by 10 percent, showing improving momentum this year compared to the same period after the Chinese New Year holiday last year.

Last week, nearly 1,290 sales contracts for pre-owned homes were signed in the southeastern tech hub, up by 7 percent from the week before, maintaining a trend of over 1,000 contracts for four straight weeks, per the Shenzhen Real Estate Intermediary Association.

The recovery momentum of Shenzhen’s second-hand housing market is good, mainly because many owners are willing to sell at a lower price and the large discounts attract some buyers who have been waiting on the sidelines, Li Yujia, researcher at the Guangdong Provincial Housing Policy Research Center, told Yicai.

Prices are slowly falling as this month, the average listing price of second-hand homes at Leyoujia stores was CNY70,900 (USD9,813) per square meter, down almost 1 percent from last month, according to the agency. The average transaction price was CNY64,900 per square meter, also nearly a 1 percent decrease.

Yicai noticed that the minimum listing price of a second-hand home with an area of 83 square meters in Shenzhen China Resources Group City, a suburban project with offices, residential buildings, and a golf course that started sales in 2014, has dropped to CNY9.9 million (USD137 million), down from CNY12.8 million (USD1.8 million) logged in November 2022. In 2020, the highest listing price was CNY14 million.

Policy Effect and Discounts

Many people settled down in Shenzhen during the years when the prices were still high, Li said. The government recently relaxed its house-buying policy for people who are not registered as permanent residents in the city and as prices drop, these people are starting to take action. Moreover, the declining mortgage rates are contributing to recovery, the researcher added.  

But Li remains cautious because history shows that the positive effect of new stimulus policies usually lasts for a month or two so the expert said that the current recovery trend could start to cool down anytime between this month and early April. 

Shenzhen's sales of new homes are rebounding but in a fragmented manner. People made 5,300 visits to popular new housing projects in the second week of this month and almost 270 units were pre-sold, the highest weekly numbers recorded in the past six months, according to the CRIC. However, the corresponding numbers for all other new properties remained low, it added.

New homes in Shenzhen are not as hot as pre-owned ones, mostly because homeowners have more freedom to lower their prices than property developers, said the head of a southern Chinese developer who is responsible for marketing in Shenzhen. Moreover, shoppers are hesitant to buy unfinished homes as they still fear their builders might default on their debts.

Another factor that may contribute to slow sales is that there are still a lot of potential buyers who believe that the prices will continue to fall so they are willing to shop around instead of immediately jumping to conclusions, the source added.

Editors: Tang Shihua, Emmi Laine