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Property market remains sluggish, but prices stay high

By Hu Yuanyuan (China Daily)
Updated: 2008-11-01 09:17

A visitor talks with a real estate agent at the Beijing Autumn Real Estate Trade Fair. [China Daily]

The World Trade Exhibition Center, the setting of the Beijing Autumn Real Estate Trade Fair is crowded and bustling with people. But the transactions and prices have both been falling over the last six months.

According to statistics from Beijing JiaHua Four Season International Exhibition Co Ltd, the sponsor of the autumn expo, 120 apartments, with an average unit price of 11,419 yuan per sq m sold out on the first day of the fair, compared to 320 units at an average price of 12,900 yuan per sq m in the spring fair opened on May 15.

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"What's the price? How about a discount? Any presents?" 28-year-old Huang Qian asked the salesperson representing Strolling Garden Town, a project located in Beijing's Yizhuang area, outside the capital's fifth ring road.

Disappointment

But she is disappointed with the answers. The price remains above 10,500 yuan per sq m, and the biggest discount the developer could offer is a mere two percent off and offers no decoration and no presents with the deal.

"The price did see a dip compared with a few months ago, and it is still exceeding my purchasing power," said Huang, with a strong sense of loss. She previously expected the price to fall below 10,000 yuan per sq m.

"I could still wait, until the property price falls into a reasonable range," Huang added.

Similarly, Lin Lei, a 32-year-old company executive in a Beijing-based joint venture, said she would continue to postpone her apartment-upgrading plan, after strolling around the expo.

"On one hand, I believe the property prices may slide further if all the potential buyers continue to stick to a wait-and-see attitude. On the other hand, I am not sure if I can still maintain salary growth next year, given the fast-expanding financial tsunami that has hit the world," said Lin.

An increasing number of Chinese residents have a growing concern regarding their jobs and fear salary cuts next year due to the country's slowing down economy.

This further dampens their appetite for buying an apartment at present.

China's economy grew 9 percent in the third quarter, the slowest pace in five years.

A recent survey on depositors, run by the People's Bank of China in the third quarter, showed that only 13.3 percent of interviewees would like to buy an apartment in the coming three months, which represents a record low since 1999.

The 2.8 percentage points year-on-year decline, is also 1.8 percentage points lower than the figures for the second quarter.

Meanwhile, less than 10 percent of interviewees in Beijing, Shanghai, Tianjin and Guangzhou have a property buying initiative, which is lower than the national average.

Overseas buying

Chinese customers' interest in buying overseas property, however, is growing.

"Compared to last year, there are more people coming to our stall and asking about the process of buying an overseas property," said Rainer Schleif, a manager of Aimeilan Consulting (Beijing) Co Ltd, a company that mainly deals with Australian and Singaporean real estate.

"This is mainly due to more immigration demand and the sharp depreciation of the Australia dollar and other foreign currencies," Schleif added.