Hundreds of angry home buyers launched a series of protests in the commercial hub of Shanghai this week as owners decried falling prices for their properties, state media said yesterday.
Hit by weak demand and lack of funding, developers have slashed prices for some new projects in the city by more than 20 percent, the China Business News said, causing an outcry among those who bought at higher levels.
Analysts said the sometimes violent protests signaled that government measures designed to cool the red-hot property market were working and they warned developers in other parts of the country were starting to cut prices.
In the latest incident, about 200 home owners on Wednesday besieged the sales office for a project of leading developer Greenland Group, demanding refunds.
“We require a refund because the loss we are suffering now is too great for us to afford,” the Shanghai Daily quoted a protester as saying.
He paid 17,000 yuan (US$2,678) per square meter last year and claimed the developer had cut the price by around 30 percent to boost sales.
In a another incident, 30 home owners stormed the sales office of a project of Hong Kong-listed China Overseas Land & Investment on Wednesday, the Global Times said, repeating a similar protest from over the weekend.
In at least one case, protests have turned violent. Home owners smashed a glass door over the weekend at a sales office of Hong Kong-listed Longfor Properties for another project in a Shanghai suburb.
A property analyst said developers had started to cut prices in other parts of China, which could potentially lead to similar protests elsewhere.
“Property developers may be under pressure to sympathize with home buyers, but if they have significant funding problems, they will opt to cut prices regardless,” Su Yan of E-house China R&D Institute said.
She added buyers had little legal basis to demand refunds. “We can understand them on an emotional level, but actually the contract law does not support the demands by home owners.”
Shanghai has responded by ordering developers who cut prices by more than 20 percent to report the change, but the local government had no plans to intervene for now, spokesman Xu Wei (徐威) told a news conference Thursday.
Demand for apartments has been falling after authorities, fearing a property bubble, banned the purchase of second homes, increased minimum downpayments and trialled property taxes in some cities — including Shanghai.
At the same time, property developers have been hit by a lack of funds, as the government hiked interest rates and restricted bank lending to rein in surging inflation and bring real-estate prices into line.
Ratings agency Standard & Poor’s expects China’s property prices to fall by 10 percent nationwide over the next year as the measures take effect.
“The Chinese government is unlikely to roll back its measures to control property prices in the next six months,” S&P credit analyst Fu Bei (符蓓) said in a research report this week.
Nationwide, prices of new homes in Chinese cities actually remained resilient last month from August despite government efforts to cool the property market, with prices in 24 out of 70 Chinese cities rising.
Another 29 cities recorded stable prices last month, while only 17 cities recorded price falls, the government said.
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