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Wednesday 8 April 2009
Price cuts boost sales in Hangzhou
Deep price discounting has driven sales of new houses to a 10-month high in Hangzhou, the capital city of the southeastern coastal province of Zhejiang.
Deep price discounting has driven sales of new houses to a 10-month high in Hangzhou, the capital city of the southeastern coastal province of Zhejiang.
Cash-strapped developers reduced prices by up to 30 per cent last month, reported agents, and buyers responded by pushing average daily sales in the city’s primary residential market to about 300 units from a low of only 20 units during the downturn in the second half of last year.
“Home sales in both the primary and secondary sectors have now returned to the level of the 2007 market boom,” said Joe Xu Chihui, general manager at the Hangzhou branch of Midland China. “We have seen potential homebuyers lining up overnight outside sales offices wherever a project was being offered at a 20 or 30 per cent discount.”
As of March 29, 3,247 units were sold in the city, the highest for a single month since June last year, according to Soufun.com, the mainland property news website.
In the secondary market there were 120 transactions per day, compared with 50 per day in the second half of last year when market sentiment turned negative as a result of the global financial crisis and slowing economic growth on the mainland.
Mr. Xu attributed the sharp rise in transactions to the deep price cuts introduced by developers. “It is the most effective way to attract buyers.”
Ocean Sky, a residential project in Xiasha district which is about an hour’s drive from the city centre, attracted buyers for more than 200 units on the first day that the last remaining units were released. The final batch was marketed at an average price of 5,900 yuan (HK$6,692) per square metre, down 28 per cent from the 8,200 yuan per square metre price tag on its first launch.
Other projects immediately followed suit with price discounting strategies including Xi Xi Shan Zhuang, Jin Se Qian Tang and Xian Lin, which were marketed at prices of about 5,000 yuan per square metre, about 30 per cent down from prices achieved in the same developments in the second half of last year.
The result was that although property deals were on the rise, prices remained in retreat, particularly in rural areas where they had fallen to levels last seen in 2004, said agents.
Mr. Xu expected prices in the city centre would now stabilise around their present levels, although costs on the outskirts could fall another 10 per cent.
Marco Cheung, general manager at Centaline China’s Hangzhou branch, said prices in the city centre had now dropped as much as 20 per cent from the second half of last year to a current average of about 15,000 yuan per square metre, while rural prices were down some 30 per cent to between 5,000 and 6,000 yuan per square metre.
“Genuine homebuyers came out in force when prices fell to an attractive level,” he said. Buying interest was also boosted by stimulus measures taken by both the central and city governments since last October.
Besides lowering mortgage rates and cutting transaction taxes, the Hangzhou city government had agreed to grant residency rights to buyers who invested more than one million yuan in property in the city centre.
Mr. Cheung said this rule would create additional buying demand as Hangzhou had been ranked as one of the most attractive cities in which to live and work.
“The city has a well-established infrastructure and education system. The investment residency scheme will certainly lure homebuyers from other cities,” he said.
However, he said investors, who accounted for about 5 per cent of total transactions, had now withdrawn from the market. “The majority of buyers are now genuine end-users.”
A supply overhang in Hangzhou could continue to depress prices, however, and Centaline’s monthly report said it would take at least a year to digest the unsold inventory of about 10,000 units in the city.
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Price cuts boost sales in Hangzhou
Sandy Li
8 April 2009
Deep price discounting has driven sales of new houses to a 10-month high in Hangzhou, the capital city of the southeastern coastal province of Zhejiang.
Cash-strapped developers reduced prices by up to 30 per cent last month, reported agents, and buyers responded by pushing average daily sales in the city’s primary residential market to about 300 units from a low of only 20 units during the downturn in the second half of last year.
“Home sales in both the primary and secondary sectors have now returned to the level of the 2007 market boom,” said Joe Xu Chihui, general manager at the Hangzhou branch of Midland China. “We have seen potential homebuyers lining up overnight outside sales offices wherever a project was being offered at a 20 or 30 per cent discount.”
As of March 29, 3,247 units were sold in the city, the highest for a single month since June last year, according to Soufun.com, the mainland property news website.
In the secondary market there were 120 transactions per day, compared with 50 per day in the second half of last year when market sentiment turned negative as a result of the global financial crisis and slowing economic growth on the mainland.
Mr. Xu attributed the sharp rise in transactions to the deep price cuts introduced by developers. “It is the most effective way to attract buyers.”
Ocean Sky, a residential project in Xiasha district which is about an hour’s drive from the city centre, attracted buyers for more than 200 units on the first day that the last remaining units were released. The final batch was marketed at an average price of 5,900 yuan (HK$6,692) per square metre, down 28 per cent from the 8,200 yuan per square metre price tag on its first launch.
Other projects immediately followed suit with price discounting strategies including Xi Xi Shan Zhuang, Jin Se Qian Tang and Xian Lin, which were marketed at prices of about 5,000 yuan per square metre, about 30 per cent down from prices achieved in the same developments in the second half of last year.
The result was that although property deals were on the rise, prices remained in retreat, particularly in rural areas where they had fallen to levels last seen in 2004, said agents.
Mr. Xu expected prices in the city centre would now stabilise around their present levels, although costs on the outskirts could fall another 10 per cent.
Marco Cheung, general manager at Centaline China’s Hangzhou branch, said prices in the city centre had now dropped as much as 20 per cent from the second half of last year to a current average of about 15,000 yuan per square metre, while rural prices were down some 30 per cent to between 5,000 and 6,000 yuan per square metre.
“Genuine homebuyers came out in force when prices fell to an attractive level,” he said. Buying interest was also boosted by stimulus measures taken by both the central and city governments since last October.
Besides lowering mortgage rates and cutting transaction taxes, the Hangzhou city government had agreed to grant residency rights to buyers who invested more than one million yuan in property in the city centre.
Mr. Cheung said this rule would create additional buying demand as Hangzhou had been ranked as one of the most attractive cities in which to live and work.
“The city has a well-established infrastructure and education system. The investment residency scheme will certainly lure homebuyers from other cities,” he said.
However, he said investors, who accounted for about 5 per cent of total transactions, had now withdrawn from the market. “The majority of buyers are now genuine end-users.”
A supply overhang in Hangzhou could continue to depress prices, however, and Centaline’s monthly report said it would take at least a year to digest the unsold inventory of about 10,000 units in the city.
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