Home buyers in China are finally seeing prices of new homes come down, as developers’ battle against increasing inventories and ever stricter government measures.
The price drops were begun by one of the country’s largest real estate developers, China Vanke, who have lowered the prices of housing projects in Beijing and South Guangdong province, with cuts taking effect this month. New homes in Beijing are now being sold at 14,000 Yuan per square meter, which is a substantial price drop of around 3,000 Yuan, and it looks as if their strategy is working as this price reduction has attracted over 600 home buyers. The developer has also reduced prices of other projects in the southern Guangdong province to 13,000 Yuan per square meter, down from 15,000 Yuan. It’s likely that other property developers will follow suit, and according to the report in Xinhuanet.com, Evergrande, Agile Property, Capital Group and R & F Property have already lowered prices in a bid to increase sales and cut inventory levels.
However not everyone is happy about these price cuts, as when China Overseas announced it would discount prices by 30% on group sales in its Scenic West Coast Project in Shanghai, more than 400 angry homeowners mounted a protest and threatened to sue over the threat of seeing much of their equity wiped out. It’s not the only company which has faced protests, as another four real estate projects whose prices were also reduced substantially met resistance from existing homeowners.
In spite of these protests experts still believe more developers will implement price cuts to help deal with falling sales and rising inventory. Just 10,743 homes were sold in Beijing in September and October, which is 46% less than a year ago. There were 69,079 new homes sold during the first 10 months, which is a decrease of 17.8% compared to last year. Sales of previously owned property have also dropped by 35.8% to 101,188 units during the same period.