2014-08-23

Vicious Competition Ends Developer Gentlemen's Agreement

Developers in China's second and third tier cities were secretly working to keep prices elevated in years past, but developers are now defecting amid vicious competition. The article below from iFeng doesn't mention September and October, but that's when competition is going to go full tilt. Small and medium developers in financial difficulty will be pushed to the wall because it's their last chance to recoup capital in 2014.

二三线城市再现房企恶性竞争 曾秘密协议不能降价
Second and third tier cities housing prices reproduction vicious price

Restriction relaxation effect failure

August 16, Harbin added to lift the restriction in force in the city, is still in the implementation of restriction of the number of cities has been close to 40.

However, the local government of this "wait" bailout behavior, market reaction was not positive. Many industry analysts, the majority of the city to relax the restriction, the restriction to relax after a "policy failure cycle", ie, the volume does have short-term effects ascribed, but after the transaction is still gradually return to "earlier level." .

"Local government lifted the restriction effect is limited, but the possibility of bailout policies appear overweight is not large, so the next period of time, the developers cut prices ran amount will become the norm." LaSalle Bank Hangzhou consultant ministry adviser said.

"Now the market price has reached a degree of cut-throat competition in the second half, especially small and medium housing prices, the price of the project will be more vicious.", A project mostly concentrated in the Yangtze River Delta region's developers told the "China Times" reporter.

Price now "vicious competition"

"In the real estate market downturn, capital chain tension environment for developers, local governments rely solely on the purchase price deregulation without substantive or it will be difficult to effectively go of inventory." Savills China Market Research Department director Jane can be expressed.

August 18, the National Bureau of Statistics announced 70 cities nationwide housing sales price changes in July situations. Among them, the new commodity housing prices fell city increased to 64, more than the total number of Jiucheng, a record high.

"From the current point of view, the price decline is mainly due to the price adjustment developers take the initiative, due to the current developer inventory pressure remains high, the price should be the most effective means of developers to the inventory." CB Richard Ellis executive director of Chen Zhongwei told reporters.

According to the reporter, currently in Wuhan, Changsha, Ningbo, Hangzhou and other cities have emerged in a significant reduction in real estate prices. Such as Wuhan Wuchang District Napa Valley [ latest news Price Unit Reviews ] Project launched the "pledged to raise 50,000 yuan direct price 200,000 yuan," the promotions. Changsha, a project directly from the unit price of 6000 yuan / square meter raised to 4999 yuan / square meter.

"From our point of view the agent of the project, at present most of the developers have begun to consider price, kicked upstairs or in a specific way to take group purchase price, special rooms and other activities, but the magnitude is greater intensity than in the past, usually at 15 % -20%. "above LaSalle Bank Hangzhou Consulting consultant said.

In Hangzhou, for example, the recent re-Hangzhou high-end real estate have price adjustment. August 17 ​​Greentown Xixi Cheng Park [ latest news Price Unit Reviews ] [ latest news Price Unit Reviews ] push the 90 square meter apartment, total 2.48 million / sets starting price of only 27,600 yuan / square meter. But after the sale of similar size in the basic price of 3.2 million -340 million each, the average price of 34,000 yuan / square meter, the price cut is obvious.

At the same time, it is also a first-class yellow gold [ Introduction News ] section of Hangzhou Qingchun Yufu high-end projects launched 252 square meters of special rooms, rough price 29,800 yuan / square meter. Similar size as the original hardcover, priced at more than 40,000 yuan / square meter.

"Now, the developers had the basic price alliance was broken." Above LaSalle Bank Hangzhou Consulting consultant pointed out that "a substantial price reduction before the developers to be more difficult, because there is a hidden among developers agreement, selling real estate is not the price, but the high point was in 2013, entering the developers now choose slashed prices for the rapid return of funds, the price of breaking the alliance between the developers. "

Developers are expected above the Yangtze River Delta, once the price window opens, the Yangtze River Delta region have some real estate 25% price cut.

"The old project of a sudden the price too much, not only the old owners can not accept, the brand will have hurt." A large housing prices nationwide project planning, told reporters, "Select milder way, so that we are easy to accept."

In comparison, the pricing pressure pure new disc project will be relatively small. These projects are mostly concentrated in the Yangtze River Delta region of developers said that the second half of this year to early next year should be a market correction lows, this time "low open" will not let the project in the future market was "elevated."

"From the current point of view, the magnitude of the purchase of a limited deregulation would fail to significantly improve the status of the market down, the national real estate market may be entering a period of adjustment depth multi-dimensional." DTZ Hangzhou and Nanjing , general manager Tang Yaoguang told reporters.

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