Property sales and prices in the Greater Bay Area cities of Guangzhou and Huizhou rose in August amid a surge in demand from homebuyers in neighbouring Shenzhen, which has reintroduced property curbs, as well as optimism about the development zone.
The prices of new homes in Huizhou rose 1.9 per cent month on month for the biggest gain among the 70 major cities monitored by the National Bureau of Statistics. The increase in August was also the city’s fifth monthly rise. In Guangzhou, meanwhile, the prices of existing homes rose 1.7 per cent, topping the country in this category as well as climbing for a second straight month.
“Property policies have been tightened in [the neighbouring cities of] Shenzhen and Dongguan, leading to homebuyers and investors rushing to Huizhou and Guangzhou, thus causing the gains in these two cities,” said Chen Xiao, analyst at Beijing Zhuge House Hunter Information Technology, a property information and online services provider.
Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.
The property market in Shenzhen, often referred to as “China’s Silicon Valley”, has remained hot despite the coronavirus pandemic. In the January to August period, the prices of existing homes in the city surged 18.7 per cent year on year, while the prices of new homes gained 4.7 per cent, according to Zhuge. Transactions involving existing homes surged by 57.8 per cent, while those involving new homes declined 2.6 per cent. The demand for homes in Guangzhou and Huizhou is an outcome of some of Shenzhen’s strictest property curbs, which were introduced mid-July.
Much lower average housing prices in Huizhou and Guangzhou, which tend to see flatter growth compared with other megacities, has also buoyed the recent trend. In August, the average transaction in Shenzhen amounted to 52,240 yuan (US$7,725.1), compared with 13,028 yuan in Huizhou and 29,526 yuan in Guangzhou, according to Centaline Group.
The positive outlook enjoyed by the Greater Bay Area development zone has also influenced some purchases.
“After the Greater Bay Area initiative was launched, the property market in the area has heated up and diverged increasingly,” Chen said. “Housing prices in the area will continue to be stable while tending to rise. The divergence will continue. Cities that are already hot, such as Huizhou, will continue to see growth in transactions.”
Huizhou has benefited from bordering Shenzhen, especially as travel time between the cities is set to be cut down to 30 minutes from an hour with the opening of the Ganzhou-Shenzhen high-speed rail link next year.
The city also topped the nine mainland cities part of the Greater Bay Area initiative in terms of finalised new home transactions, which surged 22.7 per cent to 19,788 in August, according to official data. Guangzhou followed with a 11.6 per cent rise to 10,112 transactions, according to Fangzhanggui, a property media and service company.
The transactions in Guangzhou were influenced by proximity to Shenzhen. Transactions involving property in Nansha district, the southmost part of Guangzhou closest to Shenzhen, soared 91.5 per cent in August from July, according to Shenzhen World Union Group, a firm providing real estate appraisal, data and consultancy services.
“Some core and newly established districts, such as Qianhai district in Shenzhen and Nansha district in Guangzhou, have seen quick price rebounds because of speculation,” said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institution.
More from South China Morning Post:
- Shenzhen launches marital information-sharing system with banks to prevent speculators from posing as first-time buyers
- Tighter rules, sky-high prices in Shenzhen will send homebuyers flocking to ‘investor paradise’ Huizhou, say analysts