Buying homes online is not common practice on the mainland. But will a forthcoming attention-grabbing online auction organised by a group of 20 developers change buying habits in the property market there?
On Sunday the group, including major players China Vanke, Soho China, and Huayuan Real Estate, will offer 95 properties for sale through an online auction.
Each developer agreed to put about five of their properties in key cities such as Beijing, Hainan, Hangzhou, Shanghai, Shenzhen and Wuhan on online auction through a real estate website called EJU.com, controlled by property consultant E House. Prospective buyers will be eligible to bid online after paying a cash deposit subject to the value of each property.
As of noon yesterday, 1,167 prospective buyers had registered to bid, EJU.com said. With offers 'starting at zero yuan' accepted, developers are hoping to use online auctions to draw customer interest in their properties.
Different systems will be used, including so-called English auctions, in which a property goes to the highest bidder; and Dutch auctions, in which the asking price starts at a high point and is then progressively lowered until it is accepted by a participant.
The auction is also open to the 1.5 million real estate agents on the mainland who may find prospective buyers to make bids. Those who sell a property will secure a 1.5 per cent commission from the developer.
The chairman of SoHo China, Pan Shiyi, said earlier that developers would have to accept bids even if they were a lot lower than expected.
Soho China reportedly tested the water for such sales in early April when it parted with 15 properties for 136 million yuan (HK$165.7 million) - a 12 million yuan discount from their market price.
Chen Jie, a deputy director of Fudan University's housing policy centre, said selling property online was not new on the mainland but was not yet a 'mainstream' method.
However, faced with a slow market, developers had been thinking of different options to speed up sales, said Chen.
If the response to the auction was good, they would probably put more flats for sale online. However, he believed most homebuyers would still prefer the traditional way of buying a property.
Dickson Wong Hung, property agent Centaline's chief executive for northern and southwestern China, agreed. 'Buyers still prefer to visit show flats and to talk to agents before buying.'
Wong said the online auction this Sunday was a marketing gimmick, and developers were using it to arouse buying interest and to draw attention to their properties against the background of slow sales.
'It is too early to say if online selling will become mainstream. But it is a good way to collect potential buyers' contact information.'
However, Wong said advertising of property projects online was very popular on the mainland as it was an efficient way to draw buyers in such a big market.