On June 5th, Caixin reported that since the implementation of the "517 New Policy" in Shenzhen for a week, the policy effect shows a distinct difference between the transaction volume of new homes and second-hand homes.

"The new policy has indeed driven transactions. Some of the properties that were sold in our project were only sold after the down payment was reduced because the customers did not have enough down payment before." The salesperson of Longhu Qingyunque project in Longgang, Shenzhen, told reporters.

"One of the owners had been wanting to buy a property in our project but did not have enough down payment. After the new policy was released in Shenzhen, the reduction of the down payment percentage undoubtedly created a bullish trend for the owner. Therefore, the owner directly transferred the money online and made a down payment the day after the new policy was released." The person in charge of the project said.

Analysts pointed out that the response of Shenzhen's new home market following the new policy has been more positive, especially for the projects in the core areas and core sectors.

The salesperson from Shenzhen Guangming Yuhu Jing project said that after the implementation of the new policy, there has been a significant increase in the daily number of project visits and the number of visitors and clients who contacted the project channels themselves compared to the past. Many sales consultants were almost constantly busy during the weekends and were always accompanied by clients.

The effect of the policy has also been reflected in the data. According to the data from Shenzhen Zhongyuan Real Estate, during the week (28th May-4th June) when the policy of reducing down payment and interest rates was introduced, the number of transactions of new homes increased by 52% compared to the previous week, while the number of transactions of second-hand homes decreased by 14%. However, the quoted price index of second-hand homes increased by 7.9% week-on-week, and the conversion rate of second-hand transactions reached the highest value in nearly three years.

Regarding the reasons for this phenomenon, analysts from Shenzhen Zhongyuan Research Center stated that the rise in new home transactions is due to the impact of supply. Two projects were listed over the weekend, which had a greater impact on new homes.

"The resurgence of Shenzhen's new home market is partly due to trading volume instead of price. Some new projects have reduced their prices or offered large concessions, which has driven transactions." said Li Yujia, Chief Researcher of the Housing Policy Research Center of the Guangdong Provincial Institute of Urban Planning.

The aforementioned analyst from Shenzhen Zhongyuan Real Estate believed that after the policy of "517" was introduced, the market quickly became active and continued to be so even after Shenzhen followed with its own policy on May 28th. Therefore, the policy effect on second-hand homes has weakened.

"After the new policy, the number of people waiting and visiting the second-hand homes has increased significantly. However, the buyers are still cautious when signing the contract." Li Yujia said.

It is worth noting that although the transaction volume of second-hand homes in Shenzhen decreased month-on-month after the implementation of the new policy, the transaction volume was still three to four times higher than the average weekly level in April.

Moreover, the transaction volume of second-hand homes in some intermediary agencies in Shenzhen has increased. Lianjia's data showed that in the first week when the new policy of reducing down payment and interest rates was implemented, Lianjia's branch had an increase in both transaction volume and clients viewing homes.

Last week (May 27-June 2), Lianjia's second-hand homes branch in Shenzhen saw a 5% increase in clients viewing homes compared with the previous week. In terms of transaction volume, it increased by 8%, which is the highest figure in nearly three years since the implementation of the reference price policy on February 8, 2021.

According to the requirements of the Shenzhen Municipal Government's control measures, since May 29th, the minimum down payment percentage and the lower limit of interest rates for personal housing loans have been lowered. Among them, the minimum down payment percentage for the first residential property has been reduced from 30% to 20%, and that for the second property from 40% to 30%. The lower limit of loan interest rate for the first residential property has been reduced from LPR-10BP to LPR-45BP, to 3.5%, while that for the second house has been reduced from LPR+30BP to LPR-5BP, to 3.9%.

Prior to this policy adjustment, Shenzhen had already issued a number of policies to relax its housing market, such as the implementation of "buy the property but not the loan" policy on August 30, 2023, the lowering of the lower limit of housing loan interest rates on September 25, 2023, the relaxation of the requirements for personal taxation and social security years on February 7, 2024, and the relaxation of the restrictions on house purchases on May 6, 2024, with differentiated treatments for non-local residents, families with multiple children, and enterprise purchases.

It can be seen that Shenzhen has introduced policies to support its housing market through numerous ways, and on the demand side, has reduced the threshold for home purchases with strong policy support.

"Although Shanghai, Shenzhen, and Guangzhou successively introduced positive policies after May 27th, the fermentation time is short, and with the continued fermentation of policies, the positive changes in transactions in first-tier cities may gradually be reflected." said an analyst from Zhuge looking for rooms.

Further, the analyst indicated that June is a key period for real estate companies to pursue their performance. It is expected that with the continued fermentation of new policies and an increase in marketing efforts by real estate companies, the total transaction volume of new homes in June may continue to rise steadily, but the heat may not be as high as it was last year.