Shenzhen property market will see glut in 2013

Looking closer at the southern city of Shenzhen, one of the biggest property markets on the Chinese Mainland, property prices there also increased in the first month of this year. Last week China put the brakes on the the expansion of a nationwide property tax scheme that's causing some confusion amongst market watchers on where housing prices may go this year with some of them adding there could be a glut of supply for 2013 in Shenzhen.

Major cities in China saw home prices rise in January. China's southern metropolis of Shenzhen, is no exception.

Data from a major local property information platform shows that in January this year, average prices of propery deals increased eight percent from a month ago, and 13-percent on an annual basis. Transaction volumes were three times higher versus last January.

Song Ding, director of Tourism & Realty Research Ctr, China Dev'l Institute, said:"The hot supply and demand gives market a bullish outlook. This sentiment attracts more demand into the market."

But some industry insiders say, certain new high-end projects were critical in pushing property prices higher.

Guo Shunan, president & GM of Shenzhen Joinsun Real Estate, said:"During the past two years there were not many higher-end property projects in the market. So developers reserved those projects, and may unleash more in 2013. So higher-end projects pulled up average prices which cannot be seen as an upward trend. It was just a structural adjustment."

The gloomy 2012 property market was partly due to the government's cooling measures such as tightening land supply. China's land supply hit a record low as the curbing policy enters its third year. Less land for development overshadows the ability for developers to provide new homes in a market with strong demand. And as the property market picks up again across China this year, analysts see a possible return of similar market curbs.

Song Ding said:"I think in Q2, it's highly possible for the government to make more adjustments, I see a possibility of a market tightening period. "

The China Securities Journal cited sources last Friday saying that China may delay widening property tax trials.

But some researchers from a major government think tank says further regulation of the housing market, including expansion of the property tax, allows for no delay, as a tougher message from the government may stabilize market expectations.