If you thought property in the top four Chinese metros offers a safe refuge from the weakening housing market elsewhere in the country, think again.
An industry expert has warned that the wave of price cuts in China’s housing market is no longer limited to second and third-tier cities, and that the trend is now also visible in the first-tier metros — Beijing, Shanghai, Guangzhou and Shenzhen — that have hitherto been regarded as safe bets.
China Times quoted Chen Guoqiang, vice president of the China Real Estate Society, as saying that the current market adjustment is due to changes in the supply-demand situation and economic fundamentals, rather than official curbs.
In Shenzhen, a housing project developed by Futong Real Estate Development has begun cutting prices in order to retrieve investment. However, its recent move to cut the price by 2,000 yuan (US$320.82) per square meter has caused discontent among existing property owners.
A local developer said there will be more price-cut promotions by developers.
In Guangzhou, real-estate giant China Vanke (000002.CN) offered 20 units of its high-end project at an average price of 35,000 yuan per square meter during the May 1 Labor Day holiday, lower than the average of about 40,000 yuan seen last year. Even though the company claimed the promotion ended on May 4, its on-site sales staff is still selling at the promotional price, the report said.
Meanwhile, according to data from Yahao Real Estate Selling & Consulting Solution Agency, contracted home price in Beijing was 20,836 yuan per square meter on average in the first three days of May, down 18 percent from that seen during the three-day Tomb Sweeping holiday in early April.
Home buyers have an inclination to jump in when prices are on an uptrend and stay away when prices are falling. Given this psychology, they have been hesitant in making purchase decisions recently. Meanwhile, developers that are facing funding pressure due to tightened bank loans are striving to sell as many housing units as they can.
Even home owners who want to sell their homes are now bending to the market force. Data from real estate brokerage Homelink showed 87 percent of individual home sellers in Beijing cut their prices in April.
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