Drop in mainland China home prices causing alarm
Signs of a bursting property bubble are starting to appear as discounts fail to lure homebuyers
Behind a half-priced villa in Hangzhou and a big flat valued a third off its peak in Shanghai are the stories of debt-laden entrepreneurs in a struggling economy.
Such cases remain isolated so far but are ringing alarm bells for the worst-case scenario: a hard landing of the property market in the world's second-largest economy, with dire consequences for the rest of the global economy.
Property broker Zhou Chen is helping a Hangzhou bank sell a villa of more than 400 sq metres with a large garden about 15 minutes' drive from renowned West Lake after the owner defaulted on a mortgage loan.
The bottom price for public bidding is 16,000 yuan (HK$20,200) per square metre, while those in the neighbourhood are selling their properties for more 30,000 yuan per square metre.
"The price is very attractive," said Zhou, a senior manager at Century 21 China Real Estate. "But luxury homes don't sell fast these days."
Hangzhou is where China's once sizzling property market first cracked in February when two developers cut prices. The public was astonished with the severity of the oversupply problem. The trend soon spread nationwide and renewed debate about a possible nasty bursting of the real estate bubble.
In Jiangwan, Shanghai, a furnished pre-owned three-bedroom flat sports a price tag of as low as 30,000 yuan per square metre, against nearly 40,000 yuan a year ago.