We were going to write a long analysis of this announcement by Shenzhen yesterday but then SCMP did it for us: Shenzhen has announced a shift in its housing policy that will effectively put a government-set ceiling on housing prices.
In a nutshell, Shenzhen is going to release land for developers to build subsidized housing at prices set according to a benchmark decided by the city government. This year, the cap is RMB 50,000 per sqm for land inside the city center and RMB 40,000 for land outside what used to be the boundary of the Special Economic Zone. The supply will be enough to ensure that it acts as a brake on the rest of the privately developed market
While Hong Kong claws back idle land from developers and plans to build 10,000 homes in the next three years at subsidized prices for the less well-off, Shenzhen is using its control of existing land supply to build 80,000 new subsidized homes this year alone, and 1.7 million, or 60,000 a year, until 2035.
The SCMP says Shenzhen is turning its back on the Hong Kong model of housing development with this move. Actually, it has been under way for years. And Hong Kong is not that different in theory, either. It has subsidized housing for sale and rental, too.
In practice, the difference is that one city is run in ways that put “market forces” first, and the other is not. Which will turn out more peaceful and prosperous over the longer term will surely be studied closely by historians and economists in the year 2035, if not before.
Read more from SCMP.