Dozens of small fish lie basking in the sun on the roof of a penthouse apartment in Shenzhen that is on the market for about 20 per cent more than when it last sold in 2012.
The roof has been commandeered by the neighbours to dry the fish for their dinner as the owner waits for a buyer to pay Rmb40m ($6.6m) for the property in Portofino, one of the most expensive areas in the southern Chinese city.
With loud chandeliers and deep red furnishings, the tuhao – a phrase used to mock the nouveau riche in China – apartment was originally sold for Rmb18m in 2007 and again for Rmb33m in the summer of 2012.
The price jump over the past seven years underscores how the dazzling growth in China’s property market has spread from Beijing and Shanghai to major cities throughout the country including Guangzhou and Shenzhen in south China.
The Chinese government on Monday said new home prices in Shenzhen rose 18.2 per cent in January from a year ago, just slower than the three fastest-growing markets which were Beijing, Shanghai and Guangzhou.
KK Lai, China head for Centaline Property, says Shenzhen is a hot market because of the number of entrepreneurs in industries such as technology and ecommerce. Foxconn, Huawei and Tencent are all based in Shenzhen, which was a rural fishing county when Deng Xiaoping launched his economic reforms there in 1979.
“There are a lot of big money people here?.?.?.?In Shenzhen, luxury homes sell for Hong Kong prices,” says Mr Lai.
Last year 48,000 new homes were sold in Shenzhen at an average price of Rmb21,626/sq m, a 14.5 per cent increase over the previous year. The secondary market saw even stronger growth, with prices rising more than one-fifth to an average of 27,300/sq m, according to Centaline.
The rise in costs in Shenzhen mirrors a problem that the Communist party is facing across China. The surge in housing costs is pricing many – particularly young – people out of the market and raising concerns about maintaining social stability.
But efforts to cool the market risk causing a hard landing that would endanger the Chinese economy, given the central role of property in fuelling construction spending and serving as banking collateral.
While the central government has introduced policies to spur housing supply and tame speculative buying, many of the measures have not been fully implemented.
Shenzhen boasts one of the highest per capita income levels in China. But even still, Centaline says buyers have to spend as much as 20 times their annual salary of Rmb64,000 to buy a property. Young couples can often only afford homes when both work, and even then must pay Rmb96,000 a year on the mortgage.
Carrie Ouyang, who owns a fashion business, is one of the luckier ones. Back in 2010, she bought a 100m sq apartment near Qianhai, a new economic zone in the city, for Rmb16,000/sq m. Similar flats in the area now sell for 175 per cent that price, making it one of the steepest climbing markets in Shenzhen.
Sitting alongside her friend Yumi, who co-owns a bar called Rapscallions but has not managed to buy an apartment yet, she says: “Most people have problems buying.”
Mr Lai at Centaline says that when economic migrants come to Shenzhen, “their first dream is to get a house?.?.?.?[but] the average person cannot get this dream”.
Samuel Kong, managing director of Midland Realty in Shenzhen, says the local market was propelled by the central government’s Rmb4tn stimulus package after the global financial crisis.
Shenzhen has introduced some cooling measures since 2010, including restricting the number of homes non-residents can buy, which Mr Kong says had some impact. But he points out that Shenzhen did not implement other measures unveiled by the central government last year, partly because of the potential impact on public revenues as it was building lots of new highways and a new airport.
However, Centaline and Midland both reckon that Shenzhen might follow Shanghai and Chongqing this year by introducing property taxes, though these levies have so far been very limited in scope.
One thing Mr Kong and Mr Lai agree could have a big impact on the luxury market is a possible push to force government officials to register properties they own.
In 2012, Beijing vowed to move ahead with the policy, which has not yet been implemented. But there is growing speculation that Beijing might finally act as President Xi Jinping pushes various campaigns to clamp down on corruption.
“It will definitely have an impact on property prices, as we can imagine that many officials probably have many properties not from their official income, so they will try to sell before this policy is implemented,” says Mr Kong. “The policy was supposed to be launched in 2013, but many local governments resisted it.”
Mr Lai says it would push a lot of money from the property market to other areas since government officials own most of the luxury apartments in Shenzhen.
“It is illegal to have so many properties at [their] salary, so they have to sell out,” says Mr Lai. “After they sell out, they will buy diamonds, they will buy something you cannot calculate.”
Additional reporting by Julie Zhu
中原地产(Centaline Property)中国大陆区总裁赖国强(K.K. Lai)表示，深圳市场火爆，是因为科技和电子商务等行业的企业家云集该市。富士康(Foxconn)、华为(Huawei)和腾讯(Tencent)的总部都设在深圳，而邓小平在1979年启动经济改革时，这里只是一个渔村。
美联物业(Midland Realty)深圳及惠州区董事总经理江少杰(Samuel Kong)表示，当地市场受到全球金融危机后中央政府出台的4万亿元人民币刺激计划的推动。
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