A housing agent helps a client complete property transactions in Beijing. (Photo/China Daily)
About two months after Beijing introduced stricter policies to control the realty market, the number of secondhand apartment deals has fallen abruptly. As a result of the cooling market, two leading real estate chains in the capital have reportedly lowered their service fees in order to encourage deals. Beijing News comments:
Previously, Homelink charged 2.7 percent and 5i5j charged 2.5 percent of the total purchase price as their commission. Those percentages were about the same as the fees charged by agencies in other cities, but as the average price of secondhand apartments in Beijing is almost 60,000 yuan ($8,696.9) per square meter, it is common for people to pay more than 100,000 yuan to the real estate companies when buying or selling an apartment.
In comparison, the average annual income of employees in Beijing was 85,038 yuan in 2015. In other words, the service fee of a common apartment deal exceeds a year's salary for an average employee in Beijing.
That's why people always complained about the agency fees for secondhand property deals in Beijing, yet the agencies seldom lowered the rate, because the market was so hot they did not need to lower their rates to compete for customers.
Now the situation has finally changed. After Beijing strengthened its policies in late March, the total number of registered secondhand apartment deals had fallen by 35 percent in April, and the real estate agencies have felt the pressure because declining trade means declining business revenue for them.
Unless Beijing loosens its policies, which is highly unlikely, the trend of lowering service fees will almost surely spread to other agencies. The problem of too-high real estate agency service fees will hopefully be solved in this unexpected way.
But will the solution last long? In case the realty market has fever again, will the agencies raise their service fees? That's the question to be answered by regulators.
