A glut of flats combined with growing liquidity pressure has triggered a price war in the mainland real estate market, driving down rates for some new homes by almost a third.
Some analysts said the worst was yet to come and predicted further cuts by small developers in the coming months as the central government's austerity measures cooled buyer appetite. 'The price war has begun,' said Alan Chiang Sheung-lai, head of residential for greater China at property consultant DTZ.
Price adjustments first appeared in first tier cities such as Beijing, Shanghai and Shenzhen but have extended to second and third tier cities such as Hangzhou, Hefei and Chongqing.
Among developers dropping prices are China Vanke, China Overseas Land & Investment and Sino-Ocean Land. Hutchison Whampoa has reportedly cut prices at one of its projects in Chongqing.
In Beijing, units at the Jinyu Dream Town project in Changping district have fallen to below 15,000 yuan (HK$18,330) per square metre. Developer China Vanke was seeking 17,000 yuan per square metre last year. The company was unavailable for comment but a sales representative said the reduction reflected market conditions.
Sino-Ocean Land has cut prices of a project in Shenzhen by 30 per cent. Hutchison Whampoa has reportedly slashed prices by 32 per cent at its Cape Coral development in Chongqing, asking for 10,800 yuan per square metre.
Shenzhen-based Kaisa has seen a 12 per cent decline in the average selling price of its projects this year. The developer expects further reductions next year, according to a report by brokerage firm CCB International Securities.