Liu Minxia

    WITH a surfeit of housing stock, Shenzhen’s housing prices may go down further this year, despite an expected upsurge in sales.

    By the end of 2008, Shenzhen had 6.48 million square meters of available housing stock. Only about 3.09 million square meters were sold last year, and it will take at least two years to sell off the stock, Wu Jing, an associate director with DTZ’s Shenzhen office, said last week.

    In addition, Shenzhen Municipal Bureau of Land Resources and Housing Management revealed that the city government plans to build 1.38 million square meters of government subsidized affordable housing this year, which will add more pressure to the market, Wu said.

    Housing demand in the city has been accumulating for years since the housing prices began to shoot up in 2006, Wu said, and homebuyers will likely jump into the market as prices fall, Wu said.

    Wu cited last year’s housing sales as evidence. Last year, sales in May and December were the highest, with 384,800 square meters and 787,900 square meters of houses being sold, respectively. The average prices for those two months were the lowest for 2008. In May, the average housing price was 11,014 yuan per square meter, and in December it was 10,977 yuan per square meter.

    Between 2003 and 2005, Shenzhen’s housing supply exceeded demand and the housing prices had been rising by 9 to 10 percent annually, which was about the same speed as the growth of the country’s GDP. But in 2006, the average price rose by 41 percent from the previous year, and in 2007, it rose by 45 percent — increases that were much higher that the GDP growth and beyond consumers’ buying power, Wu said. Housing sales in Shenzhen have been dropping each year since 2005, a DTZ report showed.

    A reasonable housing price for Shenzhen should be 10,500 yuan per square meter this year if the price kept pace with GDP growth, Wu said.

    With that in mind and under financing pressure, developers are expected to continue to lower prices and increase sales this year, Wu said.

    Shenzhen’s property market has remained the worst regional performer in the past months. In January, property prices in Shenzhen fell 16.3 percent from a year earlier and by 0.4 percent from December.