Home sales on the mainland rose strongly last month after major developers cut their prices aggressively, but the outlook remains uncertain.
KWG Property yesterday reported pre-sales of 1.03 billion yuan (HK$1.27 billion) for last month, up 73 per cent from February. Evergrande Real Estate and Shimao Property earlier reported monthly sales increases of 138 per cent and 93 per cent, respectively.
While the bigger developers are expected to continue to offer discounts to prop up sales, smaller players with weak balance sheets are folding under the pressure of the price war and tightened credit conditions. Early data for this month suggests the sales burst in March may be losing its momentum.
Privately run Hangzhou Glory Real Estate is reported to have filed for bankruptcy, and property agents have warned of more such cases.
'We can expect more smaller players to file for bankruptcy because of liquidity problems,' said Li Wenjie, the head of Centaline Property Agency for the northeast.
According to Centaline, 38 property firms across the country sought to sell part or all of their equity interests in the first quarter, compared with 23 in the same period last year.
Already facing cash-flow problems, these developers were plunged into a deeper crisis with the price war.
