This photo dated Aug 25, 2023 shows a view of Shenzhen, south China's Guangdong province. (PHOTO / XINHUA)

The recent relaxation of housing policies in Shenzhen has yet to produce a major effect on reviving the sector, with the city’s residential property market remaining weak amid a sagging economy and defaults by mainland property developers.

“Despite the fact that Shenzhen introduced several favorable housing policies in the third quarter, market sentiment has not been reversed. Amid the challenging internal and external economic environment, the city’s property buying activities still kept on a low level,” said Carlby Xie, head of southern China research at international real estate consultancy Savills.

According to property agency Leyoujia, the transaction volume of new-homes in Shenzhen stood at 2,076 units in September, down 6 percent month-on-month

Shenzhen announced in late August that local families will be treated as first-home buyers for loans, regardless of their mortgage record, as long as they don’t own a home in the city. This allowed them to make a lower down payment in when buying properties.

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A month later, the city reduced the mortgage rate of first-home owners, in an attempt to alleviate their financial burden.

“Performance of a city’s residential property market depends on economic fundamentals and residents’ leveraging capacity,” Xie noted. 

He cited the recent easing moves by Guangzhou’s housing authorities, which scrapped purchasing restrictions in some of its districts. “Guangzhou’s policy lifting has not brought any significant changes to its residential property market,” he said.

“As a peer city located in the same region, Shenzhen, I believe, will see a similar situation. We can expect the housing market to rebound only when the macro-economy gets better,” he added.

According to property agency Leyoujia, the transaction volume of new-homes in Shenzhen stood at 2,076 units in September, down 6 percent month-on-month. Lived-in homes saw 2,400 units of transaction in the same month, a slight 1 percent decrease from a month earlier.

Commercial properties in Shenzhen were also pressured by the economic downturn in the third quarter as firms were cautious over scaling-up business, leading to a drop in demand for office space.

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Vacancy rate of the city’s Grade-A offices rose to 28.3 percent as of the end of September, up 1.3 percentage points on a quarterly basis, data from Savills showed. Average rental prices of top-class offices dropped 3.1 percent quarter-on-quarter to 168.9 yuan ($23) per square meter per month.

Xie expects the vacancy rate to hit 35 percent and rental prices to fluctuate at a low level next year as office supply increases.

A total of 329,000 square meters of Grade-A office space are expected to come into the market in the fourth quarter, bringing the total volume in the city to about 11.05 million square meters by the end of this year, nearly 10 percent higher than last year.

Contact the writer at sally@chinadailyhk.com