Talk Of Substantial Price Cuts
A report from Dow Jones Newswire on China. “China’s housing market has defied gravity and government restraints for two years, floating on a tide of bank loans and speculation. Until now. In Beijing and Shanghai — two of the country’s largest markets — and other megacities, sales have stalled and prices have dropped, falling slightly in some pockets and dramatically in others. Luo Chuanyun, a 29-year-old liquor distributor, bought his first apartment on Beijing’s northern edge for $150,000 in late 2016, when prices were climbing by more than 20% a year.”
“The purchase put Mr. Luo up to his neck in debt, with mortgage payments of about $15,000 a year on an annual income of a little over $18,000. Mr. Luo said his real-estate agent told him that to find a buyer for his apartment now he would need to sell for half of what he paid. ‘I’d be short too much money,’ Mr. Luo said.”
“Some developers that a year ago put up special crowd barriers when apartments went on sale are now biding their time. In early December, a group of homeowners stormed the sales office of their Shanghai complex, Central Washington, whose developer, Shanghai Zhaoping Real Estate Development Co., was advertising new apartments at prices about 7% less than ones sold earlier in the year. One apartment owner said the new prices suggested the value of the apartment she bought from the developer in March had dropped by about 17.5%.”
“The developer couldn’t be reached to comment. It said on the project’s social-media account that price fluctuations are normal and that talk of substantial price cuts was ‘purely a misunderstanding.’”
“In some neighborhoods on Beijing’s outskirts, prices have fallen by double-digit percentages. In March, main street in the town of Yanjiao was lined with busy property agencies. Buyers who couldn’t pass Beijing residence requirements or afford its prices flocked there, pushing up prices in a sleepy exurb without much of its own economy. Since then, homebuying limits helped push prices down more than 30%. ‘For Rent’ signs now adorn the windows of abandoned brokerages.”
“‘There are people who bought multiple homes who are now trying to sell one to pay off the mortgage on another,’ said Ran Yunjie, a property agent. One of his clients bought an apartment last year for about $230,000. To find a buyer now, the client would have to drop the price by 60%, according to Mr. Ran.”
