| I've kept a keen eye reading real estate - related news, in Shanghai area in particular, as I'm a home owner here. Being a real estate professional in California before, I am not surprised to see the property up-trend has reversed. "What goes up must come down" as the cliche goes. Even though prices will eventually go back up again, but the increases of property values during the last three years have been too soon and too fast. This kind of exuberance was unhealthy and illogical.
In a way, I'm glad that the government has finally come up with some rulings to intervene. Anybody who has been trying to buy properties in Shanghai, or some other Chinese cities, must be so fed up with frustrations not being able to find new properties to buy. I went with a girl friend early this year trying to purchase a flat in several complex. Every sales office we went to, we were told that every unit was sold out. One development in Jinan District was about to go on the market in late February. We went there, was told to register our names in a booklet. I asked whether that meant we're reserving a unit. The answer was no as no one could reserve any unit. They will be lotteried on 2/26, so just be there on that morning before 9. Then why bother putting your name down. What's strange was that the sales woman told us that 80% of the units were reserved. Wasn't that a contradiction of what she had just said? Leaving the sales office, my friend and I went to a few real estate companies nearby. When we inquired about this complex, one sales man said, he has units on any floor with all types of floor plans. He even showed up Zeroxed copies of the floor plans. When we asked him the selling prices, he replied, " Just add 160,000-200,000(RMB) to the asking prices on the opening day(2/26). Will somebody tell me what these money is for, and for whom? I heard that this is a way developers hiked their properties by setting aside many units to sell through real estate agents. That said, I am glad to know the recent government rulings have put a heavy dent on developers' sales. Indeed I heard many real estate companies are closing some of their sales offices to save money. As to how much prices will come down and how long the down trend will last, that's anybody's guess. I don't think developers are hurt yet, not if they have reaped in loads of money during the past 2-3 years. My guess is that if many units remain unsold, whether from developers or from private home owners, by year end, we shall see prices coming down more drastically. Properties in downtown area should be able to weather the price drops better than suburban areas or complexes with more than 30% of the homeowners being investors. In California, many lenders won't lend in a condo project that has more than 30 % of the units non-owner occupied. I don't know if it is till the case though as I moved out LA in 1993. So folks, if you're planning to buy a flat, just hang on. It's going to be a buyers' market within a half year. People can at least pick and choose and netotiate the prices now. So let's wait and see. |
When the House Prices Goes Down