Trade in your home, will you?

Ben Kwok September 13, 2023 11:30

Perhaps there are some offers more attractive than trading your old phones for the new iPhone 15.

Well, if you are lucky enough to have a property in Zibo, an urban city in Shangdong with a 4.7 million population.

To welcome the traditional peak season for the property market in a rather depressing environment, Shandong government took the lead to coordinate with 12 property developers and agencies and came up with a rather creative idea on how to boost property sales.

By signing an old-for-new service contract with an agency platform, one would agree to sell the current home and start looking for a new one. One can start looking for a new home from the participating developers and the agency platform would sell one’s flat within three months.

The developers, agency platform and home buyers would sign a tripartite agreement and pay a deposit for the intention to purchase a new home. The platform would try its best to sell the property because it would undertake a commitment to complete the sale that would be a prerequisite for the new buy.

What a smart Utopia economy! Of course, the details lie in the transaction price which the agency would take reference from the third party for evaluation and the agreed price can vary. But a bigger skepticism comes from how the platform can underwrite the risk of defaults, as highlighted in the crisis facing once mighty developers such as Evergrande, Country Garden and Sunac.

But if it works out, it is a grand idea for all parties. The Chinese always have an unfailing love for property and there is always a strong demand for upgrading even in a depressing economy.

The platform could serve as an energizer in the value chain that would jack up the property sales and hence prevent property companies from bankruptcy and failure to deliver the new property, avoiding a domino effect that could jeopardise the social stability.

It will take time to see how this new trick works magic in the upcoming golden holiday, a traditional peak season for people to shop for property. But it is interesting to see how different mainland cities came up with their own idea for the mega sale campaign.

For example, the Nanjing government has offered as much as 1.5 per cent cash rebate for properties over the size of 90 square meters, virtually offsetting the property tax while Shenyang will give a 10,000 yuan subsidy and 5,000 yuan consumption vouchers for the first 3,000 homebuyers.

Now, would our Hong Kong government do something? Probably not as it seems busy preparing the night economy campaign while fixing the citywide flooding and landslides after the black rainstorm and super typhoon earlier this month.

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Ben Kwok

EJ Insight writer