Business / Industries

Price drops reflect widening gap in property market

(Xinhua) Updated: 2014-02-26 14:42

A potential homebuyer takes a photo of a property display model inBeijing. [File photo / China Daily]

HANGZHOU - Though home prices in most Chinese cities continued to rise in early 2014, developers in some smaller cities have begun discounting homes under the pressure of piled-up inventory.

Dothink Group, a property developer based in Zhejiang province, reduced the asking price of its Beihai Park Project in the provincial capital of Hangzhou from 18,000 yuan ($2937.6) to 15,800 yuan per square meter last Wednesday for a sell-off.

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A day later, Tenhong Land company joined the price war by slashing the prices of its Xiangxieli Project, located near Beihai Park. The average asking price for the project was reduced from 17,000 to 13,800 yuan per square meter.

Zhao Luxing, researcher with the Ministry of Housing and Urban-Rural Development, said the price drops were triggered by severe oversupply.

Statistics show that the real estate inventory in Hangzhou city had reached 113,000 units by the end of 2013, among which 77,000 units were residential homes.

The discount has attracted a large number of buyers to the two housing projects, and all 200 houses in the Beihai Park Project were bought up within two days.

According to Cheng Weiming, a commentator with kfw001.com, a property information website in Hangzhou, large inventory is a shared problem of many second- and third-tier cities, and more cities may start cutting home prices soon.

In Changzhou city in neighboring Jiangsu province, the developers of a project announced a 40-percent discount last week. Prices were reduced to an average of 7,000 yuan per square meter, down from 11,000 yuan in December.