Cross-posted from Investing in Chinese Stocks.
That won’t please the Jinan homeowners who are protesting Glorious Property (0845.HK). In the past two weeks, Glorious Property (恒生地产）cut prices on its Hope Mountain (望山）property from ￥8000/ sqm to ￥6000/ sqm. Angry property owners who recently bought at the higher price protested and it is believed the developer hired some street toughs, resulting in conflict and some people arrested for battery.
The developer said the ￥6000 price is a bottom price and that most properties are currently selling for ￥7200/ sqm. Prices were cut from an opening price of ￥8200/ sqm due to market conditions. Owners say that the developer was advertising ￥6000/ sqm, but started saying ￥7400/ sqm once owners started complaining.
Home owners also complain that the contract didn’t reflect the developer’s promises.
There are more reports of jingle mail as well. Guangzhou’s Panyu district court has seen mortgage related cases increase 77% over last year; Wuxi has seen a 100% increase. Jingle mail is most common among real estate speculators, not home owners. This is both a good and a bad sign, considering there are estimates of 50 million empty homes.
There’s also a comparison of the U.S. housing bubble and China, explaining China’s situation is very different due to factors such as high down payments. As I’ve pointed out previously, China’s subprime doesn’t appear in liar loans to individual home buyers, it appears in places such as rehypothecated copper and credit guarantees. Chinese businessmen will buy homes solely to use as collateral for otherwise very expensive or impossible to obtain business loans. A 70% down payment on that property only shows a small slice of the total credit attached to the property. Prior discussion here and here.
There may also be signs of cheaper mortgages, at least in Beijing. Banks and media are going back and forth in their claims, but now the media is saying first time home buyers in Beijing can again borrow at 10% off the prime rate. This comes just ahead of Silver September and Gold October, two of the biggest months for real estate sales.
If true, easier credit is being hit by a wave of supply. Beijing is expected to have 39 new projects hit the market in September, the highest monthly total in 2014. Only 4 of the projects are inside of the 5th ring road and 90% of existing inventory is outside of the fifth ring as well, reports Ifeng.
