Home prices in the mainland Chinese cities that make up the Greater Bay Area (GBA) are poised to fall in June, as a slew of market-cooling measures by local authorities broke the five-month rising streak in residential property prices, standing in stark contrast to Hong Kong’s record-setting market, according to one of the biggest local real estate agency networks.
The Centaline Greater Bay Area Index, which tracks the average home prices across the 11 cities that make up the GBA, “is expected to record a significant decline in June,” after rising to a record of 126.9 in May, according to Louis Chan, Asia-Pacific vice-chairman and chief executive of the residential division at Centaline. Rising prices in Hong Kong are expected to break May’s record this month.
“Both supply and demand decreased simultaneously, which significantly slowed down the increase in the property price index in many cities in the Greater Bay Area,” Chan said in a statement, adding that other contributing factors were local authorities’ property market control measures, sporadic cases of coronavirus outbreak in Guangdong province and lockdown measures enacted in June.
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Hong Kong’s property bull run – unencumbered by policy restrictions – is racing ahead of the nine cities in southern China’s Guangdong province that make up the GBA, widening the yawning price gap that could attract investment dollars to pour northwards in search of better value. Record property prices in an economy that is still trying to claw its way out of its worst unemployment and recession on record also exacerbate public grievances over housing affordability, particularly as memories of the 2019 street protests in the city remain raw.
The GBA refers to the Chinese government’s scheme to link Hong Kong and Macau with Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing into an integrated economic and business hub. The cluster of 11 cities have a combined population of 70 million people and an economy estimated at US$1.7 trillion, bigger than South Korea’s output.
Indicators for six of the GBA cities rose to records in May. That comprised the overall GBA index, as well as the local gauges for Guangzhou, Shenzhen, Foshan, Zhuhai and Jiangmen. Prices in Shenzhen, dubbed China’s Silicon Valley for its concentration of some of the country’s largest technology companies from DJI to Tencent Holdings, broke records for 21 consecutive months through May. Jiangmen, one of the furthest from Hong Kong and among the poorest, saw the biggest price jump with a 3.4 per cent jump from a low base.
Prices fell 1.4 per cent in the gambling hub of Macau, declining 3.9 per cent in the manufacturing centre of Dongguan last month. To rein in runaway prices, local authorities unveiled a slew of measures to cool the market. Commercial banks raised their mortgage rates in Shenzhen last month, increasing the cost of buying home to help the government crack down on speculation.
Second-hand property prices in Hong Kong rose 5 per cent in the first five months of 2021 according to CCL, as the economy showed tentative signs of a recovery, amid a tapering of the coronavirus outbreak in the city. First-quarter economic growth was a larger-than-expected 7.9 per cent from a low base last year.
“From May to June, the first-hand market was booming, driving the market for second-hand properties,” Chan added. “The second-hand property prices in Hong Kong are likely to break historical high in June.”
Overall property transactions in the first half of this month are expected to reach 50,521, according to Ricacorp Properties. This will be up 24.7 per cent from the 40,523 in the second half of last year and up 54.4 per cent from 32,720 in the first half of last year.
The average price per square foot at 50 major lived-in estates in May also stretched a rally of five months and marked a 22-month high to HK$15,422 (US$1,987), up 6.8 per cent from the bottom in February 2020 and just 1.1 per cent below the record high of HK$15,593 in May 2019, according to Ricacorp.
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