Friday, November 18, 2011

Alarm in China as real estate prices fall

As China's cooling real estate sector shows no sign of easing, some struggling companies are taking creative measures to attract buyers with promotions such as free iPhones, name brand bags and even luxury cars.

The promotions are desperate measures as China's housing prices continue to plummet.

In one of the biggest dips this year, October home prices fell across China in 33 of 70 cities like Shanghai, Wenzhou, Shenzhen and Guangzhou year-on-year, according to a report released by the National Bureau of Statistics on Friday.

In Wenzhou in China's eastern province of Zhejiang, property prices dropped the most among 70 cities with a 4.4% dip compared to 0.5% in Beijing and 0.2% in Shanghai. It's a significant blow to developers that have experienced years of prosperous growth in the wealthy coastal city of Wenzhou.

The downturn has forced developers to get creative. Buyers are flocking to one real estate company in Wenzhou that's giving away free BMWs with every purchase to its first 150 buyers. The promotion has already attracted 130 buyers in the past two weeks , the company said.

"Because of the current cooling real estate market, we want to sell these homes faster," said Lin Jianzhong, a sales agent at Central Palace, a new 900-unit housing complex being built in the suburb of Yueqing in Wenzhou. more