Shenzhen house sales sluggish in busiest months
Updated: 2007-11-07 14:05
Zhang Wei, a senior analyst with Centaline Shenzhen, a Hong Kong-based real estate agent, expects housing prices to drop 30 percent from the peak over the next two years.
"The new mortgage policy isn't a short-term one. It's a reflection of the government's push to regulate the market," Zhang said.
While investors and speculators are under greater financial pressure, homebuyers are also more cautious to enter the market, anticipating a drop in housing prices, he said.
The People's Bank of China said in late September that homebuyers must pay minimum mortgage down payments of 40 percent for their second residential properties. The mortgage interest rate for second homes was also raised to 1.1 times the benchmark one-year lending rate.
In Shenzhen, the local government will soon launch a new second-hand housing evaluation system and will impose a 20 percent income tax on transaction earnings based on the official evaluation rather than the contract signed between agent and seller.
The government is trying to prevent speculators from revising contracts to reduce personal income tax and increase profit.
Homebuyers in the city are hopeful the new policies will bring down prices.
Emily Wang, who just quit her job to have a second baby, said she is waiting for housing prices to fall. "It's too crowded for a six-person family to live in a two-room apartment, but we can't afford a bigger one," she said.
"If new home prices drop to around 10,000 yuan, we would consider buying one - or we might seek an opportunity in the second-hand market," she said.
Effie Zhang, a 27-year-old media strategy planner, was lucky. She recently sold her 38-sq-m apartment, which had doubled in value since she bought it two years ago, and purchased a second-hand three-bedroom apartment after she got married.
"Its value won't drop dramatically given the economic boom and closer ties with Hong Kong. But whether it rises or drops in value, it's a cozy home - good location, good environment and it's convenient," Zhang said.
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