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Wind Knocked out of China's Housing Prices

Translated by Liu Peng
Original article
: [Chinese]

A wave of housing price cuts appeared to have swept across major cities in China after the Olympics, which earlier this year was still a property hotspot.

Property developers in Shenzhen, southern Guangdong province, were among the first to slash prices to boost the sluggish local real estate market.

The move, however, triggered a domino effect across the country, with developers in Hangzhou, Beijing and other large cities following suit.

In the first week of October, the daily-average price for houses traded in Shenzhen had tumbled below 10,000 yuan per square meter, an important psychological barrier used to measure the decline of the market.

Traditionally, the period from September to late-October has been the high season for property markets. However, the annual Shenzhen autumn fair for real estate that opened on September 29 had dismaying results, according to participating developers.

Based on data released by the Shenzhen bureau of land resources and housing management on October 2, that day alone 64 units of new houses, measuring 5,222 square meters in total, were sold for 50.13 million yuan.

The above trading volume averaged out to 9,599 yuan per square meter--the lowest daily-average price recorded in the City in 18 months.

Acoording to the Bureau's latest market analysis report for the months from January to August, the real estate market had remained sluggish since June.

The report said in August, the city recorded an evarage property price for housing units at 14,448 yuan per sq m, a drop of 16.7% compared to the average price ten months ago.

Developers in Hangzhou were also plagued by lower prices and trading volume.

Since early-September, developer Vanke had taken the lead in offering discounts and others followed suit, with some offering cuts up to some 30%.

For example, by mid-September, prices for new properties in a township named Qianjiang New City lingered between 12,000 and 13,000 per square meter after discount--some 5,000 yuan per squre meter lower than properties in the surrounding neighborhoods.

Upon learning of the price slash, some eager buyers queued overnight to compete for limited units. Some crashed the developer's sales office to protest "old" home purchases, who had paid higher prices for similar units when the township was first launched. Protesters were holding banners and threathening to withdraw their purchases.

Some developers who had practiced double standards in offering same units for different prices had come under pressure, and some agreed to put forward a one-off cash compensation scheme.

The wave of real estate discounts also spread to nearby cities like Ningbo and Wenzhou.

Beijing was also unable escape the gloomy market unscathed.

Between September 29 and Oct 4, trading volume for housing units dropped 72% compared with the same period last year, according to data posted on the the Beijing municipal real estate management website. During that week, 412 units were sold, or an average of 69 units per day.

Discounts were also being offered to boost sales. For instance, on September 25, a housing township named Flower City had offered a model of a two-bedroom apartment measuring some 100 square meters for 6,981 yuan per square meter. The published price was more than double that, initially 15,000 yuan per square meter.

According to a report posted on Beijing Statistical Information Bureau website, real estate market indications had showed signs of declinding this year due to a combination of macro controls, especially in the third quarter of the year.

The report stated that sales of housing units continued to be slow, but prices remained high.

Industry players believed the current slump in trading volume was temporary, as property prices had in past months rose too much beyond homebuyers' expectation. Moreover, uncertainties in the domestic and global economy had also put off investors.

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