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Shenzhen's buyers snap up new homes two weekends in a row, defying a government plan to flood China's Silicon Valley with cheap public abodes

By Pearl Liu

/ SCMP |

November 12, 2019 11:51 AM SGT

SINGAPORE (EDGEPROP) - Shenzhen's homebuyers are rushing to snap up newly completed residential property, ignoring a plan by the local authority to flood the market with 1 million cheap public housing flats.

Sales of new homes increased for two consecutive weekends, after the city's government announced an ambitious plan to add a million public homes to the housing supply, capping their prices at 50,000 yuan (US$7,148) per square metre (HK$5,200 per square foot) on October 23.

The strong demand for housing underscores how Shenzhen " dubbed China's Silicon Valley for its home-grown technology giants including Tencent Holdings, Huawei Technologies and DJI " has joined the ranks of one of the five most expensive cities to live in, according to data by the property consultant CBRE.

The average price of new homes in China's 70 major c46- wprds pmities rose 0.5 per cent in September from a month earlier, the slowest pace since February, according to the National Bureau of Statistics. But prices in Shenzhen defied the slowdown, with the average home price in the Bao'an district, about 40 minutes drive from downtown Shenzhen, rising 9.6 per cent in the third quarter to 54,000 yuan per square metre from last year, according to prices compiled by Midland Holdings, one of the biggest real estate agents.

To make housing affordable, Shenzhen's government announced a plan in June 2018 to add 1 million public housing units, and capped the average price on October 23. Prices in areas surrounding the city centre will be limited to between 20,000 yuan and 30,000 yuan per square metre. Still, the quick succession of policies did not give buyers any cause for pause.

"Do you want to wait for plans that you have no idea whether will be successful?" asked Zhang Dawei, an analyst at Centaline Property Agency. "What happens if you cannot get an affordable home even in a couple of years?"

Shenzhen's government plans to build 1 million homes during the 18 years through 2035 for young professionals, first-home buyers and low-income residents, which means close to 60,000 new homes being added to the housing supply every year. That's triple the annual additions in 2016 and 2017, and more than 30-fold the completion every year prior to 2010.

The ambitious plan is still fraught with unanswered questions, including the qualifications of housing applicants, the quality of the housing and whether the supply target is reachable.

"Until homebuyers get the exact answers for their questions, the new plan cannot really put a brake on sales, or halt the price increases," said Midland's chief analyst Fion He. "The best scenario is that it can lower a buyer's expectation and help moderate the price increases. For most people who have an immediate need for housing, they will just have to get whatever they can get right now."

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.

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