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Zheng Yangpeng

The seven-day Golden Week holiday used to be a busy time for developers, but not this time.
Analysts expect the weakest October in recent memory and see developers offering more price cuts after sales in 31 cities, monitored by property consultancy CRIC, fell 27 per cent year on year.
The bearish sentiment is also taking its toll on property stocks. The Hang Seng Mainland Properties Index has fallen to its lowest level since August 2017 and is down 17.5 per cent from its recent peak on September 21.
In Shenzhen, only 226 new homes were sold in the past week, down 49.3 per cent from the same period a year ago.
China’s debt-laden developers raise discounts to lure buyers
In Hangzhou, only 293 new homes were sold in the first seven days of October, the lowest since 2009. And in Nanjing, only 154 – the lowest in the past seven years.
However, in Beijing and Shanghai, 235 and 645 units were sold for a year-on-year growth of 64.5 per cent and 243 per cent respectively.

Lu Wenxi, senior analyst with Centaline Shanghai, said the anomaly in these two top cities can be attributed to the low comparison base last year, adding that the volume in Shanghai was the second lowest since 2012.
The price discounts in various cities have not buoyed up sales
Lu Wenxi, senior analyst with Centaline Shanghai
“The price discounts in various cities have not buoyed up sales,” said Lu. “On the contrary, it will only cause people to be more cautious. Developers will only face more pressure to deplete inventory and offer further price cuts.”
Zhang Hongwei, research director of Shanghai-based property consultancy TopSur, agrees. “There will be more cases of price cuts in cities across China. Financing curbs on developers remains firmly in place, and the fourth quarter is when developers race to achieve their annual sales target.”
The pressure is telling.
As home sales have slowed down significantly since August, developers have revved up marketing campaigns and cash discounts to lure buyers.
However, massive price discounts of up to 30 per cent in some cases have led to protests by angry buyers who paid the full price earlier.
Chinese homebuyers vent rage at Country Garden for slashing prices
Photos circulating online show such protests not only took place at projects of Country Garden Holdings in Shangrao and Shanghai, that was reported by the media, but also at other developers such as China Vanke, China Evergrande, Longfor, Tahoe and Ronshine.
Yu Liang, chairman of China Vanke, the mainland’s second-largest developer by sales, set the tone for the sector in a speech to his employees in late September. The hall in which he addressed his employees was covered in bold, red banners screaming “Survive”.
Yu said that the company would scale back its non-property businesses and put on hold expansion plans while emphasising on cash receipts. This essentially means lower margins and faster asset turnover.

Raymond Cheng, head of China Property Research at CGS-CIMB Securities, said Vanke is more prudent than most of its peers, and the pessimistic tone aims to force a rethink by the government to ease its tight grip on the sector.
“For developers it is never bad to be over prudent. They are prepared for deterioration, and this can be seen in the cooling land prices.”
China’s property bull run in smaller cities may be tiring out as curbs to tame home prices bite
Meanwhile, as developers show less interest in land acquisition, the average land price premium has fallen to 10 per cent in the third quarter, from 30 per cent a year ago, according to China Index Academy.
“Developers will cut land acquisition and other expenses before resorting to the last option: price cuts. The October sales data is very important. If it slumps too much, we’ll see deeper price cuts,” Cheng said.


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Chinese developers set for disappointing October as cash discounts fail to spur Golden Week sales

Chinese developers reported weak sales during the generally busy Golden Week holiday period. Photo: EyePress News

A person walks past by a gate with a sign of Vanke at a construction site in Shanghai, China, March 21, 2017. Picture taken March 21, 2017. REUTERS/Aly Song

Visitors throng the Bund, Shanghai's iconic waterfront, on the second day of the National Day "Golden Week" holiday, in China October 2, 2018. Picture taken October 2, 2018. REUTERS/Stringer ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. CHINA OUT.

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Beijing’s property market has been a focus of government curbs to cool prices. Photo: Bloomberg

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China’s property bull run in smaller cities may be tiring out as curbs to tame home prices bite

Sellers of second-hand homes in Qingdao city in Shandong province are aggressively lowering their prices to stay competitive. Above, Qingdao in a photograph taken in 2014. Photo: EPA

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Harry's View.

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Property

Hong Kong & China

Business

China Business

Money

Wealth

Property sales in 31 cities fell 27pc year on year in the first seven days of October


Property sales in 31 cities fell 27pc year on year in the first seven days of October.


China Vanke

China home prices

Chinese developers set for disappointing October as cash discounts fail to spur Golden Week sales

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Property sales in 31 cities fell 27pc year on year in the first seven days of October

Property sales in 31 cities fell 27pc year on year in the first seven days of October