Shenzhen’s government unveiled new housing purchase restrictions in March, including increases in the minimum down payment and qualifications for non-local home buyers. This led sales volume of the city’s new commodity housing market to slow in Q2 2016. However, the average sales price continued to increase. 

In Q2 2016, the new supply of Shenzhen’s new commodity residential properties increased by 7.2% QOQ to 12,590 units (approximately 1.32 million sq m), according to Shenzhen’s Urban Planning Land and Resources Commission. By district, Longgang recorded the highest supply volume at 5,902 units (548,234 m2), followed by Bao’an (425,207 m2) and Nanshan (242,570 m2). 

However, the transaction volume decreased by 48.7% Q-O-Q, or 55.6% YOY to 7,852 units (approximately 845,000 m2) in Q2 2016, as stricter government restrictions affected market sentiment. By category, two-bedroom units recorded the highest transaction volume at 3,239 units (nearly 287,000 sq m), accounting for 41% of the total sales volume, followed by threebedroom units (28%) and one-bedroom units (13%).

By district, the only growth in transaction volume on a quarterly basis was seen in Luohu District, increasing by 29% QOQ to 771 units (approximately 79,000 m2). By contrast, the largest decline was seen in Yantian District, decreasing by 83% QOQ to 64 units (approximately 7,000 m2) by the end of Q2 2016. 

Despite the slowdown in sales volume, the average sales price continued to increase. Sales of high-end and luxury projects pulled up the average price by 17.4% QOQ or 95% YOY to RMB56,477 per square metre (psm). In Nanshan, several new high-end residential projects, such as Peninsula Phase III and CR Shenzhen Bay, led the average sales price for the district to increase by 10.4% QOQ to RMB82,143 psm. In Futian, the average sales price increased by 8.2% QOQ to 84,576 psm, the highest of all districts in the city. 

In Q2 2016, two land transactions with significant premiums and high accommodation prices indicated that developers remained confident in Shenzhen’s residential property market. Power China Real Estate Group and China Jinmao Holdings Group jointly purchased a residential and commercial land site in Longhua New District for RMB8.29 billion, or an accommodation value of RMB56,781 psm. The land plot covers a land area of approximately 35,700 sq m and has a permitted GFA of 146,000 sq m. In addition, Logan Group purchased a mixed-use land site (including a residential component) in Guangming New District for RMB14.06 billion at a premium of 160%, making it the most expensive land site sold to date in Shenzhen.

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