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Price cut in new housing projects shows signs of market cooling
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CHINA’S red-hot property market has been showing signs of cooling down, with some new housing projects cutting prices.
Cuts were reported in Beijing, Hangzhou and Shenzhen, where property sales have been strong.
A new real estate project in suburban Beijing priced its apartments below the market estimate by 12 percent or about 3,000 yuan (US$482.92) per square meter to 21,000 yuan in mid-March.
A project in Xiaoshan District in Hangzhou, capital of Zhejiang Province, cut the price of its units by 17 percent or about 2,500 yuan per square meter to 12,500 yuan.
The cooling down has been supported by official data.
Home prices in major Chinese cities grew at a slower pace in February. Fewer cities saw month-on-month price rises, according to the National Bureau of Statistics.
A sales manager with a property company, on condition of anonymity, said developers were cautious in talking about “price cuts.” Instead, they are using tricks like giving free interior renovation, free household appliances or a free down payment to woo buyers.
Despite cooling down signs, industry experts warned against exaggerating the trend.
Some property developers may cut prices to sell quickly for liquidity. But that does not mean overall property prices will go down, said Gu Yunchang, an official at the Ministry of Housing and Urban-Rural Development.
The property market is becoming rational and price changes, triggered by market demand, are normal, said Zhu Zhongyi, deputy head of the China Real Estate Industry Association.
The price of housing has been rising rapidly since 2003. It rose from 2,197 yuan per square meter in 2003 to 5,850 yuan per square meter in 2013, with an annual increase of 10.3 percent, according to Wind Information Co, a Shanghai-based financial data provider.
Ren Xingzhou, a researcher in the market economy division of the Development Research Center of the State Council, warned against blind stimuli policies to prevent future declines in real estate investment.
The statistics bureau’s data showed investment in property development rose 19.8 percent in 2013, compared with only 11.41 percent in 2012, Ren said.
Despite this, Ren has predicted real estate investment to fall due to slow growth in land supply.
The decline of investment growth in real estate will inevitably slow the rise in investment in fixed assets, thereby weakening the driving forces of China’s economic expansion, Ren said.
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