Agents predict reductions to entice reluctant buyers during what should be a busy season
Peggy Sito 14 September 2011
Developers of mainland residential properties are expected to adopt a price-cutting strategy to boost sales as cautious home seekers are reluctant to enter the market during what is usually the peak season.
Property agents said sales were down by as much as 70 per cent against the same period last year.
"September and October is usually the peak season for selling homes. Last year, our 380 branches in Shenzhen sold more than 100 units a day during these two months," said Andy Lee Yiu-chi, head of Centaline Property's Shenzhen branch. "But now the number has fallen below 30."
There were fewer buyers as the government's policies to cool the market and tame inflation took hold, he said. "I believe developers will offer flats at prices 10 to 15 per cent below market value."
A similar situation can be found in other big cities like Beijing, Chengdu, Chongqing, Shanghai and Tianjin, where agents expect new suburban homes to be priced as much as 20 per cent below the market rate.
In Shanghai, 191,700 square metres of residential space was sold in the first 11 days of this month, down 40.21 per cent on the same period last year, according to property consultant You Win Realty.
The government's introduction of a restriction on the number of homes people could buy was sharply reducing demand, said Dickson Wong Hung, Centaline's chief executive for northern and southwestern China.
Small developers would cut suburban home prices by as much as 20 per cent, and those in the city by no more than 10 per cent, Wong predicted.
In January, Beijing announced eight austerity measures to cool the property boom. At least 35 cities moved to restrict registered residents from buying more than two flats. The same restriction will apply to smaller cities.
In Zhejiang, Quzhou followed Taizhou to become the second city in the province to adopt restrictions.
A recent survey conducted by mainland developer China Vanke shows the extent that demand has fallen.
Xiao Jing, the company's deputy general manager, said only 200,000 households in Beijing met the government's eligibility criteria while also possessing the financial resources to buy another flat.
Xiao said about 150,000 flats were sold in Beijing in 2009, 130,000 last year when the restriction was imposed, and fewer than 70,000 flats so far this year.
"While demand is in decline, supply is rising with 150,000 units in the market," said Xiao.
Wong of Centaline offered one explanation for why demand was dropping in Beijing.
"Many mainlanders living and working in Beijing come from other cities and they do not have hukou [residency status]. They are not eligible to buy until they have worked in the city for five years."
Developers have been facing growing pressure to offload company stock to bring in cash as banks tighten credit supply. The only way to speed up sales seems to be through reducing home prices, Wong said.
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Developers likely to cut prices 15pc
Agents predict reductions to entice reluctant buyers during what should be a busy season
Peggy Sito
14 September 2011
Developers of mainland residential properties are expected to adopt a price-cutting strategy to boost sales as cautious home seekers are reluctant to enter the market during what is usually the peak season.
Property agents said sales were down by as much as 70 per cent against the same period last year.
"September and October is usually the peak season for selling homes. Last year, our 380 branches in Shenzhen sold more than 100 units a day during these two months," said Andy Lee Yiu-chi, head of Centaline Property's Shenzhen branch. "But now the number has fallen below 30."
There were fewer buyers as the government's policies to cool the market and tame inflation took hold, he said. "I believe developers will offer flats at prices 10 to 15 per cent below market value."
A similar situation can be found in other big cities like Beijing, Chengdu, Chongqing, Shanghai and Tianjin, where agents expect new suburban homes to be priced as much as 20 per cent below the market rate.
In Shanghai, 191,700 square metres of residential space was sold in the first 11 days of this month, down 40.21 per cent on the same period last year, according to property consultant You Win Realty.
The government's introduction of a restriction on the number of homes people could buy was sharply reducing demand, said Dickson Wong Hung, Centaline's chief executive for northern and southwestern China.
Small developers would cut suburban home prices by as much as 20 per cent, and those in the city by no more than 10 per cent, Wong predicted.
In January, Beijing announced eight austerity measures to cool the property boom. At least 35 cities moved to restrict registered residents from buying more than two flats. The same restriction will apply to smaller cities.
In Zhejiang, Quzhou followed Taizhou to become the second city in the province to adopt restrictions.
A recent survey conducted by mainland developer China Vanke shows the extent that demand has fallen.
Xiao Jing, the company's deputy general manager, said only 200,000 households in Beijing met the government's eligibility criteria while also possessing the financial resources to buy another flat.
Xiao said about 150,000 flats were sold in Beijing in 2009, 130,000 last year when the restriction was imposed, and fewer than 70,000 flats so far this year.
"While demand is in decline, supply is rising with 150,000 units in the market," said Xiao.
Wong of Centaline offered one explanation for why demand was dropping in Beijing.
"Many mainlanders living and working in Beijing come from other cities and they do not have hukou [residency status]. They are not eligible to buy until they have worked in the city for five years."
Developers have been facing growing pressure to offload company stock to bring in cash as banks tighten credit supply. The only way to speed up sales seems to be through reducing home prices, Wong said.
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