Potential buyers at a real estate fair in Shenzhen in this file photo. Housing prices in Shenzhen are expected to drop further.(Photo: Shenzhen Daily) Photo Gallery>>>

    BEIJING, June 12 -- Housing sales perked up in Shenzhen in May as prices continued to slide, but experts predict prices won’t stop falling in the coming months.

    The average housing price in Shenzhen’s six districts dropped to 11,143 yuan (US$1,610.39) per square meter in May, down 23 percent from a year ago and 7 percent from April, according to a report released by Centaline (China) Shenzhen-Hong Kong Property Research Center on Tuesday. The average price in May was lower than that in February last year.

    Of the six districts, Bao’an recorded the biggest fall in May, with the average housing price reaching 10,418 yuan per square meter, down 7.3 percent from a month ago. The average housing price in Longgang District didn’t slide as much as it did in April and fell only 2 percent from a month earlier to 8,910 yuan per square meter.

    The report showed sales of new apartments rose quickly as more houses become affordable. In May, 4,732 houses were sold with a total floor area of 460,000 square meters, up 51 percent and 56 percent respectively from a month ago.

    “Despite the rise in transactions, I’m not optimistic about Shenzhen’s housing market in the near future,” said Wang Shitai, brand manager of Sunstars Real Estate in Shenzhen.

    “Developers will have to slash prices further in order to boost sales to maintain their businesses. Many have offered prices as low as 5,500 yuan per square meter in order to attract enough buyers.”

    China Overseas Property, a major real estate developer in Shenzhen, launched a new housing estate, Xi’an Huafu, in Bao’an District on May 31, with opening prices of 5,500 yuan per square meter, the lowest in the district this year. The developer launched another project, Kangcheng Guoji, in early June, and set the opening price at 4,988 yuan per square meter.

    “Judging from the opening prices of these new housing estates, major real estate companies like China Overseas and China Vanke are pessimistic about the city’s housing market,” said Zhou Qu, a Centaline manager.

    “Many developers now face huge financial pressure and housing prices will drop a bit further in the next two months as they launch a price war.”

    Zhou said the city’s housing market wouldn’t show signs of life until September or October when sales were expected to rise markedly.

    In the past six months, with a tightening of the property market, Shenzhen’s housing prices have dropped 30 percent from a year ago. This has become agony for investors, especially speculators.

    Many well-off locals and investors from other cities who have been keen on speculative property trading said they could no longer afford to pay their mortgages as the houses they had bought couldn’t be sold at high prices. Many were forced to sell the apartments much lower than the purchase prices in order to cut their losses.

    “More investors are expected to stop paying the mortgages later this year and early next year because they simply can’t afford it,” said Guo Shiping, an economics professor at Shenzhen University. “Housing prices will slide further after the Beijing Olympics and banks will feel the pinch. The number of speculators who can not afford mortgages will peak next year.”

    Four major State banks in Shenzhen were reported to have broken the rules governing pre-owned house mortgages last month, granting loans at low interest rates. Many allowed homebuyers to pay only 20 percent of the total price as a down payment — even when they were buying a second house — instead of the 40 percent required by regulators.

    “This is very risky, not only for the banks but also for the developers and investors,” Guo said. “When prices drop further and more investors fail to pay the mortgages, all of them will suffer.”

    (Source: Shenzhen Daily)