Shenzhen, the southern city known as China’s Silicon Valley, could be losing its lustre due to a housing affordability crisis. 

Led by tech behemoth Huawei, talent, resources and money have been flowing out of Shenzhen to cheaper locations, in particularly Dongguan, which is about an hour’s drive north. Home prices have risen 508% in the last 10 years in Shenzhen, leading it to become the priciest city in China. 

The cost of renting a home in Shenzhen climbed 23 per cent last year alone, data from real estate agency Homelink showed, with those in Nanshan district jumping 46.2 per cent year on year to top the list. 

Shenzhen made global headlines in 2015 for having the world’s fastest-rising house prices, according to real estate firm Knight Frank. Prices surged almost 50 per cent last year to an average of 31,425 yuan per square metre, which is more than double the average in Guangzhou, another mega city and the capital of Guangdong province. That is despite salaries being only 10% higher in Shenzhen. 

If tech companies move out to less expensive cities nearby, this will hurt the corporate banking business that is essential to the city’s finance industry.