Cash flow problems could lead to developers defaulting

As of March 16, sales of new homes and existing homes in Beijing plunged 57.5 percent and 66 percent year on year, respectively, official data revealed.

Meanwhile, a lackluster property sector has made banks more cautious of offering credit to property developers.

With eyes on cash flow, some developers have chosen to cut prices to cash in. Two local developers in Hangzhou, capital of Zhejiang Province, announced sales promotions in late February.

Combined sales revenue of 30 monitored home developers stood at 66.5 billion yuan, nosediving by 39 percent from January, according to Zhang Dawei.

Major home developers, especially listed ones, are eager to publish impressive financial results. A business slump could cause their stocks to drop.

Li Tiegang, director of the real estate research center of Shandong University, said sales promotions in big cities could lead to similar actions in smaller cities.

"We may see some price cuts in two or three months," said Li.

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