Home prices in Shenzhen, Guangdong province, have risen to record levels, helped by limited supplies and further relaxations in purchase policies, industry experts said on Wednesday.
According to a survey conducted by the China Index Academy, an independent research institute focusing on the housing industry, Shenzhen led all cities in terms of housing price increases during the past six months, with new residential property prices surging by 6.58 percent in June from a month earlier.
Prices for second-hand houses rose by 8.59 percent in June from a month earlier, and by a dramatic year-on-year surge of 19.12 percent, the survey said.
"The price increases have mostly been triggered by the acute shortage in housing supply," said WangFeng, director of the Shenzhen Real Estate Research Center.
New homes in Shenzhen are mostly developed after the renovation of old urban areas, a process that takes a relatively long time, according to Wang.
"The supply shortage has helped push up new housing prices," he said.
According to Wang, a growing number of residents have developed strong demand for new houses as Shenzhen has developed into one of the most competitive cities in China. The relaxed purchase policies have also helped drive the price rise, according to Wang.
In March, China reduced down payment requirements for buyers of pre-owned housing to 40 percent from the previous 60 percent, and exempted apartments held by individuals for over two years from certain sales taxes.
Zeng Li, a senior researcher with global property service company Jones Lang LaSalle, attributed the burgeoning Shenzhen housing market to the positive wealth effect brought about bythe stock market in April and May.
"There is anecdotal evidence to suggest that the positive wealth effect following a surging domesticstock market has played a role and it may be one of the reasons why Shenzhen has so far outperformed markets in other cities," she said.
According to data from China Securities Depository and Clearing Co, residents from Guangdong opened the biggest number of new stock accounts among all regions in China in 2014, with Shenzhen residents accounting for about half of all new accounts in the province.
"Given the strong historic relationship between the performance of the domesticstock market and the residential property market, it is easy to see how the positive wealth effect may have contributed to the recent surge in sales volume and prices," she said.
According to JLL's preliminary data, new home prices in Shenzhen's high-end residential property market grew by 7.5 percent in the second quarter of the year, with asking prices in some projects increasing by as much as 30 percent year-on-year.
The volatilestock market in the past two weeks is unlikely to reverse the burgeoning recovery in the Shenzhen housing market, according to Zeng.
"The fundamentals underpinning Shenzhen's residential property market remain strong, with more demand being generated by the expansion of the local economy and Shenzhen's office market," she said.