By Chen Hong (China Daily)
Updated: 2007-11-07 14:05

Peak season for the property market in Shenzhen, the southern city neighboring Hong Kong is usually in the autumn months of September and October.

But this year the number of transactions dropped sharply over that period, as banks tighten credit and the local government prepares to issue a new policy trying to curb rising prices.

Sales of new residential homes dropped 16 percent in September month-on-month to 302,400sqm - a record low for a single month of the year, according to the local housing management authority.

That's nearly 30 percent lower than the more than 430,000 sq m sold last September.

The situation was even worse in October. Daily transactions from October 1 to 9 plunged almost 80 percent from September to just 2,026sqm. Sales dropped to less than 1,000 sq m from October 10 to 16, according to the housing management authority.

"Micro-control policies have begun working to cool down the overheated real estate market in Shenzhen," said Wang Feng, director of the Shenzhen Real Estate Research Center.

"Both investors and homebuyers are taking a wait-and-see approach, and that's creating a stagnant market," he said.

But prices, which soared from an average 9,384 yuan per sq m last year to 15,518 yuan in August, are expected to remain high.

"We expect rocketing prices to ease to a normal growth level when the seller's market gradually becomes a buyer's market. But it's not realistic to think the market will crash and prices tumble to the level of two or three years ago," Wang said.

Continued fast economic growth could prop up the real estate market, which is vulnerable to other factors like housing supply and economic integration in the region, including Hong Kong and other Pearl River Delta cities.

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