Shenzhen old home prices jumped 10 per cent in April, with business loans being used for speculative buying

By Pearl Liu pearl.liu@scmp.com / https://www.scmp.com/business/china-business/article/3084872/shenzhen-old-home-prices-jumped-10-cent-april-business?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp&utm_content=3084872 | May 19, 2020 1:06 PM SGT
The prices of old homes in Shenzhen jumped 10.3 per cent year on year on average in April, pushed up by easing measures introduced by the People's Bank of China to boost the economy amid the coronavirus pandemic.
The prices were 1.7 per cent higher than March and topped those recorded in the 70 major cities tracked by the country's National Bureau of Statistics (NBS), which released the figures on Monday.
The secondary market is free of government intervention. "We have recently seen clear instances of speculation in Shenzhen, in particular," said Yan Yueijin, director of E-house China Research and Development Institute, adding that regulators needed to step up supervision to maintain a "healthy housing market in the city".
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The average lived-in home price in Nanshan, Shenzhen's most expensive district and home to technology behemoths such as Tencent Holdings, ZTE and drone maker DJI, for instance, jumped 16.1 per cent year on year to 101,000 yuan per square metre at the end of April.
Flats in the city's wealthier districts have seen heavy speculative buying since late March. On April 3, Beijing released 400 billion yuan in additional liquidity into the banking system to help small and medium-sized businesses during the pandemic. But banks in Shenzhen, China's technology hub, had already granted 315.8 billion yuan worth of new loans in the first quarter of 2020, an increase of 71.8 billion yuan from the same period last year.
About 80 per cent of the loans were made to companies. But some of that money was used for speculative purchases in Shenzhen's red-hot property market. It is not known how much was used in this fashion, as there are no official figures showing how much money was used for its intended purpose of paying wages and keeping factories going.
On April 20, however, the Shenzhen branch of the People's Bank of China issued an internal notice urging banks to investigate business loans collateralised with real-estate this year, as the city's housing market heated up rapidly.
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E-house China's Yan said bets on the future of the Greater Bay Area (GBA), an integration initiative that covers Hong Kong, Macau, Shenzhen and eight other cities in China's southern Guangdong province, also pushed up prices in the city. The GBA has a total population of 70 million residents and a combined economy estimated at US$1.5 trillion. It would be the world's 13th largest economy, larger than Spain and smaller than South Korea, if it were a stand-alone economic entity.
Home prices rose rapidly across the country in April, as businesses returned to normal after coronavirus lockdowns were lifted in most cities.
New home prices, excluding state-subsidised housing, in the 70 cities NBS tracks gained 0.42 per cent in April, almost tripling the number for March. Prices in the secondary market rose 0.22 per cent in April " in March they rose only 0.05 per cent.
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"Pent-up housing demand was being further released in April, as the economy and life continued to get back on track," an NBS official said.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.
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