The transaction volume of second-hand commercial housing in Shenzhen in January this year saw a 75 percent reduction from the prior year and a ten-year low.

According to the official platform data of Shenzhen, just 1557 second-hand commercial dwellings were sold in January, covering a transaction area of 147,300 square meters (about 1.6 million sq. feet), a decrease of 75 percent over last year. In addition, this is the second month in a row that the monthly turnover of second-hand houses in Shenzhen dipped below 2000 units, down from 1605 units last October, a new low in nearly a decade.

Shenzhen was the first mainland city to launch a policy of guiding prices for second homes in February 2021. Generally, it’s 70 percent of the market price, followed by banks issuing loans for home purchases at the guiding prices as instructed by the authorities. These policies were launched after the second homes in Shenzhen quickly cooled down.

In the month when the second-hand housing guide price policy was released, the transaction of second-hand commercial housing in Shenzhen dropped sharply to 4,166 units, down 40 percent from 7,008 units in the previous month.

In March 2021, the data rebounded to 6,789 units. Since then, second-hand commercial housing has declined for seven consecutive months, once falling to 1,605 units in October last year.

According to the Shenzhen Real Estate Agents Association statistics for second-hand houses shows, 44,375 second-hand houses were for sale (including self-help) in 2021 across Shenzhen, down 63.1 percent compared to 12,0295 available for purchase in 2020.

Shenzhen is a microcosm of the mainland real estate market. Due to Beijing’s suppression, the mainland real estate market entered a frigid winter last year, and the property market in January this year followed the downward trend from last year.

Ping An Securities real estate chief analyst Yang Kan believes that the industry cash flow has not seen significant improvement for the mainland’s future real estate trend. That, coupled with the first two quarters for the peak of overseas debt maturity, has seen real estate companies under financial pressure to invest more cautiously. As a result, there is a need to inject confidence into the various market participants.

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