(Ecns.cn) – With sales volumes in major cities declining and the number of protests staged by homeowners increasing, one conclusion may be that China's property market has reached a turning point and the country's property bubble is about to burst.
In recent months, more and more signs have shown that the government's 18-month property price curbing policies are finally taking effect and starting to shake the high prices.
Under the tightening policies, a large number of house builders have had to cut prices as inventory piles up. These sales promotions are to scramble for more buyers – those who are qualified, capable, and willing – and to prepare financial reserves in order to weave a thicker coat to ward off the coldness of the upcoming winter.
However, most of these discounts appear only in suburbs, and these areas usually only have lower-end houses. With a maximum price drop up to 20%, they have seen excellent sales performances recently.
Discounts, not in secrecy anymore
China Vanke Co., the biggest publicly traded property company, conducted a survey in Beijing in September 2011, by which it found that only 3% of the families (about 200,000 families) were qualified, capable, and willing to buy a house under the current tightened restrictions.
The requirement for non-locals to hold proof that they have paid social security and income-tax for at least five years is definitely one of the strictest home-purchase restriction policies across the nation.
With the sound implementation of this restriction, it has effectively weighed down Beijing's property prices, and moreover, home purchases may suffer a further decline.
This is a key factor that forces developers to consider adjusting their strategies. In Vanke's survey, this grim fact has raised much concern for developers. With a large inventory, many developers chose to ride before the hounds and got out first for the limited 3% of customer resources.
With a sales promotion, the Longfor Properties took the lead in the actions of "Occupy 3%" in Shanghai in September, which also resulted in an unexpected protest staged by homeowners against price cuts that caused their losses in their investment. They broke the glass in the sales office, and marched with banners with a phalanx of police watching over.
They were demanding to speak with the developer to get a refund or cancel their contracts but were unsuccessful, according to local media. A report mentioned that the price cuts exceeded 25% per square meter.
But the promotion earned the Longfor Properties an incredible sales revenue sum that hit 2 billion yuan ($309.2 million) in just five days. Such outstanding sales achievement has not appeared in Shanghai for a long time.
