Real estate developers in China have been forced to reduce the asking prices of new housing projects, as the government continues to implement cooling measures intended to restrain demand and price growth in the mainland’s real estate market, a trend that indicates the realisation of market-wide price corrections.
“China Vanke, the largest developer on (in) the mainland, started to cut its asking prices at (for) new projects two weeks ago and other privately owned developers have followed,” said Alan Chiang Sheung-lai, DTZ Head of Residential Property in China.
Kenneth Pak Kei-yuen, General Manager of Midland Realty, said that price reductions in new suburban projects are becoming the norm in Beijing.
The price-cutting measures have been most evident in Sino Ocean Land’s Poetry of River housing project in Beijing, where the developer offered a 17 percent discount to cash buyers, while a 16 percent discount was offered to purchasers with mortgage plans.
Under the discount system, the average asking price of the project was reduced to 21,000 yuan (RM9,758.87) psm this month.
Mr. Pak said other developers offered two to four percent discounts.
Xia Haijun, CEO of China Evergrande Real Estate, said that other projects will offer discounts between five and 20 percent.
Beijing Roaming Wonderland, a project developed by China Vanke and Beijing Urban Construction Group, offered a four percent discount to full-payment purchasers and a two percent discount to purchasers with mortgage plans.
Dickson Wong Hung, Chief Executive of Centaline Property’s China office, said that developers started to reduce asking prices due to the restrictions imposed on buying second homes and to banks’ stringent requirements on real estate loans.
“Previously, about 30 percent to 40 percent of buyers in Beijing were foreigners or mainlanders from other provinces. However, we lost these buyers after the government imposed restrictions on buying homes,” he said.
According to Centaline, the absence of these purchasers accounted for a 60 percent drop in sales in the secondary market in the first half of this month, compared with the same period in January.