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Property owners gathered at Vanke's sales headquarter on 5th September demanding refunds or compensation since the actual value of their property dropped precipitcously in recent months.
Vanke Co,China's biggest real estate
developer, started its second largest sales promotion in major cities like Shanghai,Hangzhou,Ningbo and Nanjing. Heavily discounted prices and generous packages delivered immediate sale results .Transactions in the first three days' reached Rmb95.63 million.
An article posted by a 27 year-old real estate broker on his blog has drawn overwhelming attention almost overnight and triggered high-level probe into the situation of Shenzhen's mortgage loans.
The blogger named“Fengyu”claims that Shenzhen has been suffering from a string of housing mortgage defaults which could bring 1.5bn worth of bad loans to commercial lenders in Shekou district alone and up to hundreds billion financial losses for Shenzhen as a whole. According to “Fengyu”,a considerable amount of purchases made by property investors at the last quarter of the previous year and early this year were out of speculation purpose. These are home buyers looking for quick gains not long-term returns.
Investors were angered by the fact that the average housing prices in Shenzhen has declined more than 20 percent in the recent six months and problems concerning issues such as decoration quality, community management and green land ratio became even more obvious when the value of their properties started to fall rapidly.
Indeed, it is confirmed by lenders that some property owners have collectively decided to suspend their monthly mortgage payments and local banks have advised those customers to make the right decision because credit defaults will definitely put negative records on their credit history.
Influenced by the incidents in Shenzhen and increasing uncertainty in housing prices, many potential home buyers have postponed their purchases. Rumors about shooting mortgage default rate have also triggered regulatory investigation into the soundness of bank loans.
Chen Ziwu, senior economist and professor of Business and Finance department of YAlE University, said: “there are some positive things for China to learn from the US credit crisis which include further liberalization of the financial markets and the speed-up of introduction of new financial vehicle and products.
Through subprime credit products, the US has successfully transferred the risk of lending to financial markets all over the world. For China, however, the risk is currently all taken by our commercial banks.
Chun TU
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Vanke's generous discounts were widely welcomed by home buyers. Hangzhou Jiubao Residentials offered more than 20% discount for customers.With the average price at 11,000 yuan per sm cut to 8500-9500 yuan, most units on market were sold on 4th September, Hangzhou.
Chinese banking regulators have warned commerical banks to tighten their mortgage lending criteria after the US credit crunch brought widespread impact on the world financial markets.
Chen Zhiwu, Professor of Finance and Economics at YAlE University,believes that there are some positive things to learn from the US credit crisis which includes futher liberalision of China's financial market and the speed-up of the introductionof new financial products.
“China’s mortgage market is similar to what the America's before 1938 when most housing loans were backed by commercial banks and that made leaders much cautious about the soundness of their outstanding loans since they had to take the risks all by themselves. The loans provided by commercial banks, however, were limited which led to the launch of innovation mortgage products offered by various financial institutions like subprime mortgages.”
- Investors still keen on realty Chinadaily.com
Contracted investment in the real estate sector in Shanghai accounted for 27 percent of all foreign direct investment in the first half, double that for the same period last year, according to the latest Shanghai statistics bureau report.
- Central bank: US gov't mortgage rescue positive to market stability Chinadaily.com
China's central bank said on Monday that it believed the US government's mortgage rescue plan would be positive to financial market stability.
- Property sales in China continue decline Chinaview.cn
China Vanke, the country's largest listed real estate developer, said property sales revenue fell 35.2 percent in August 2008 compared to August 2007.
- Vanke sales tumble 35% as measures curb demand Shanghai daily
CHINA Vanke Co, the nation's biggest publicly traded real-estate developer, yesterday said sales in August fell 35 percent from a year earlier, the third monthly drop, driving the shares to an 18-month low.
- Post-Olympic housing prices in Beijing to go up after adjustment
The housing prices in Beijing after the Olympics will go up following a period of adjustment, said Chen Jian, executive president of Beijing Olympic Economy Research Association, at a press conference on Beijing Olympics and Beijing Economy held yesterday.
The average ratio between housing price and income, an index indicating the degree to which housing is affordable by the local population, is now as high as 9.4 in Beijing, the capital, much higher than the average level of many metropolises in the world.
Economists and executives participating here in the Boao Forum for Asia on Saturday highlighted the uncertainties of China's real estate industry, which they said might experience a rational cooling at best or a painful reshuffle this year.
- Constructions go on around China as foreign investors are keen on seeking investment opportunities in high-end residential and commercial properties.
More than 80% potential home buyers think that housing prices in their cities are still too high and expect future price falls soon.
Pan Shiyi, Chairman of SOHO LTD, admits that for property developers, especially non-public listed companies, have to resort to price cutting campaigns to weather financial difficulties after the 2008 Olympics.