Date
20 August 2017
A man walks past an advertisement outside a residential construction site in Hangzhou, where home prices fell 12.2 percent year or year in the second quarter. Photo: Reuters
A man walks past an advertisement outside a residential construction site in Hangzhou, where home prices fell 12.2 percent year or year in the second quarter. Photo: Reuters

Falling property prices force some owners to abandon new homes

Many homeowners in Zhejiang, Jiangsu and Fujian provinces have stopped paying their mortgages and abandoned their new homes amid plunging property prices, the 21st Century Business Herald reported on Thursday.

Data from E-house China’s R&D institute showed that the average selling price of new homes declined 0.8 percent in the first half from a year ago. But in Hangzhou, the capital of Zhejiang province, the price in the three months to June plunged 12.2 percent year or year to 15,389 yuan (US$2,500) per square meter.

Cases of homeowners abandoning their mortgage payments are not widespread, the report said, but regulators have warned of a potential crisis.

In May, Shang Fulin, chairman of the China Banking Regulatory Commission, told lenders to be very much concerned about credit risks in third- and fourth-tier cities as well as small and medium-sized developers as cases of mortgage abandonment have been seen in some regions.

An unnamed source in a commercial bank in Hangzhou said such cases are rare, although many homebuyers are complaining about the falling property prices.

Some developers were forced to give some compensation to clients who bought at peak prices, such as a free parking lot or cash for decorating their homes, the report said.

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