Yi Anwen bought a home for 1.95 million yuan ($314,200) in the southern Chinese city that borders Hong Kong from embattled developer Kaisa Group Holdings Ltd., which has defaulted on some of its debts while being investigated as part of a corruption probe.
Although Yi and hundreds of other buyers in Shenzhen have spent the past six months fighting to take ownership of their homes despite being blocked by the investigation, the 33-year-old engineer, who made his purchase in September, doesn’t want his money back now.
“Home prices in Shenzhen have risen so much in the past few months,” Yi said. “Buying a similar home now would cost me about 2.5 million yuan. Refund? No way!”
Shenzhen, where home prices have been rising since December, is shaping up as ground zero of a property market recovery that is slowly taking hold in China’s major cities. In Beijing and Tianjin, prices also have been increasing. And the decline in average prices in 70 cities tracked by the government narrowed to the lowest in 10 months in March after policy makers began reversing four years of property curbs and cutting interest rates. Last year’s property slump has weighed on an economy that is estimated to grow this year at the weakest pace in 15 years.
“Home prices are almost at the bottom,” said Alan Jin, a Hong Kong-based real estate analyst at Mizuho Securities Asia Ltd. “If simultaneous increases in both price and volume are the criteria of a recovery, that’s what we’re seeing right now.”
Prices in Beijing started rising in March, ending eight months of declines. They also advanced in Tianjin and stopped falling in Shanghai. The number of cities where home prices declined fell in April: new-home prices dropped in 47 cities of the 70 the government tracks from a month earlier, compared with 49 in March, according to bureau of statistics data released Monday. In January, they fell in 64 cities.
The recovery is sustainable because the government has seemed willing to unwind property curbs, and the economy will likely improve in the second half of the year due to more expected stimulus measures, said Mizuho’s Jin.
An index tracking Shanghai-traded developers more than doubled since Sept. 30, and a Bloomberg Intelligence gauge that also includes Hong Kong-listed homebuilders surged 67 percent.
Still, the pickup in demand remains patchy, with smaller cities experiencing a property glut after years of overbuilding.
“Uncertainties about the recovery remain relatively large,” said Du Jinsong, Hong Kong-based analyst at Credit Suisse Group AG, citing a lack of evidence that government easing can spur credit growth. “We’re still not optimistic over the medium to long term.”
Huang, the Hangzhou buyer, said he’s sure the timing of his decision was right.
“Interest rates are still falling, so of course prices for good quality apartments will climb,” he said. “You just need to make the right pick.”
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