J.P. Morgan: Shenzhen existing-home price declines narrow: Reduced new-home supply supports stabilization, but inventory pressure remains

Why might Shenzhen existing-home prices stabilize?

Shenzhen existing-home prices fell 0.4% in the first three quarters of 2026, a markedly narrower decline than the 10.4% recorded for all of 2024 and the 9.8% decline in 2025. A market expert from Centaline Property interviewed expects existing-home prices to reach an approximate bottom by the end of 2026.
Support comes from reduced new-home supply and stabilizing new-home prices. Shenzhen's new-home supply fell from approximately 39.7 thousand units in 2024 to approximately 34.7 thousand in 2025, and stood at approximately 16 thousand in 2026 through the time of the report. The expert expects shrinking supply and policies requiring sales of completed homes to constrain supply in 2027–2028 and shift some demand to existing homes.
JPMorgan's view is broadly consistent with the expert's: shrinking land supply is conducive to a mild stabilization in home prices in first-tier cities, especially Shanghai and Shenzhen. The bank still expects home prices elsewhere in China to fall moderately.

The expert put Shenzhen's new-home inventory at approximately 22 thousand units, with an absorption period of 11.4 months, but this measure excludes completed inventory. Including it, the absorption period exceeds 20 months.
Existing-home listings rose in 2025 from 56 thousand units in January to 107 thousand at year-end, and were broadly stable at 104 thousand–107 thousand units in 2026, equivalent to approximately 23 months of sales. Listings have stopped increasing, but the stock remains high.
The expert expects shrinking new-home supply to reduce Shenzhen new-home sales volumes by 10% in 2026 and a further 10%–15% in 2027; existing-home sales volumes are expected to remain broadly flat over the two years.

The expert believes the policy's short-term impact on the Shenzhen market is limited given the small amount of residential land sold recently and the transitional arrangements: projects on land acquired before 28 August may be presold under the old rules through the end of 2027.
However, mortgage loans will not be disbursed until completion has been officially registered, increasing developers' cash-flow pressure. For projects subject to a height limit of 80 metres, the time from land acquisition to presales could lengthen from at least 6 months to 18 months.

In October, Shenzhen reduced the social insurance requirement for talent housing applications from 3 years to 1 year and shortened the housing ownership lookback period from 5 years to 3 years. The expert believes the relaxation comes against a backdrop of weak sales absorption: the sell-through rate for talent housing available for sale fell from 90% in 2023 to 17% in 2025, and eligibility requirements may be relaxed further in the future.
The expert believes that although talent housing is generally approximately 30% cheaper than commercial housing in the same area, the quality, location and eligibility restrictions of some projects reduce the appeal of the discount, and some buyers may turn to existing homes or higher-quality commercial housing.