Shenzhen Home Prices Keep Soaring

飞雪寒冰

New home prices in Shenzhen rose 18.6 percent month-on-month in August, the sixth straight monthly gain, while sales by floor area fell 29.7 percent from a month earlier, real estate consultancy DTZ said in a report on Sept. 1.

Sales in August totalled 386,000 square meters in the southern Chinese city, at an average price of 18,830 yuan per square meter, the report said.

The decline in sales was due to weaker supply and demand, DTZ said.

While first-time buyers were largely priced out of the market, developers also withheld units in anticipation of higher prices in September and October, a peak season for housing sales, it said.

飞雪寒冰

The government's tightening of terms and conditions for second-home mortgages also dampened demand from investors as they expected a price fall, it said.

In June, the China Banking Regulatory Commission instructed banks to end special discounts on mortgages issued to second-home buyers in an effort to restrict credit growth and reduce risk.

The regulator ordered lenders to strictly abide by 2007 rules that require second-home buyers to pay a deposit of at least 40 percent and banks to lend at 110 percent of the benchmark rate.

Lenders have circumvented the rule by providing special deals to property investors. The mortgage market has been a hotly contested area for the banks, which see it as good business because foreclosures are rare in China.