One property was selling for ￥17,000 in January, now it is selling for under ￥12,000.
From iFeng:杭州部分楼盘单价直降5000元 恐将续跌至年底
Cross-posted from Investing in Chinese Stocks.
SOCAM SLASHES CHENGDU PRICES BY 30% IN SCRAMBLE FOR CASH
Socam Development, an affiliate of Shui On Land cut prices by 30 percent at a housing project in central Chengdu last week as the troubled real estate company struggles against slumping sales and falling prices.
YUEXIU PROPERTY PLANS $495M RIGHTS ISSUE IN CHINA CASH CRUNCH
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Yuexiu Property announced last week that it plans a HK$3.84 billion ($495 million) rights issue, becoming the second major Chinese real estate developer in a week to turn to the equity markets as slowing home sales continue to squeeze the country’s property companies.
CENTURY 21 REAL ESTATE NOW SELLING HOUSES ON ALIBABA’S TAOBAO
Century 21 China, which is a franchise of the well-known US chain, last month joined a number of other large real estate agencies in pulling their listings from China’s biggest real estate website, Soufun.com. The boycott of the giant real estate site was sparked by disputes over what the agencies termed unfair pricing by Soufun.
In the announcement of its new tie-up with Taobao, however, Century 21 only wanted to talk about the future.
The centerpiece of the policy is a 30% discount on interest rates for first time home buyers. Can they do that? As covered inChinese Cities Call for Easing of Mortgage Credit, Bankers Laugh, interest rate policies are under the purview of the PBOC and the central government. Unless they approve of the move, these are merely suggestions for the banks, who will promptly ignore them.
The plans also call for reduced taxes and fees for first-time and smaller home buyers. These policies aren’t new and have been introduced in other provinces this summer.
And finally, one of the features of the subprime lending fueled housing bubble in the U.S. was loans made closest to the peak failed first. This may be happening in China as well, with a trust product in trouble due to the credit guarantee firm going bust only one month after launch.
First some background on Handan, epicenter for this case. Handan in Hebei province has seen a lot of private lending and a lot of bankruptcies. From April of this year: Handan Farm Cooperative Goes Bust; 100,000 Rural Households Invested Over ￥140 million; Boss Has Fled. That bankruptcy took down a number of smaller firms months later: Hebei Rural Cooperatives Go Bust.
Now the developers are going under. In one case a developer owes ￥3 billion, about half of which is owed to thousands of small private lenders. The developer has fled. There’s some English coverage of this news thanks to Macquarie being exposed to losses, due to the developer also owning a credit guarantee firm that guaranteed trust products. From Australian Financial Review, Macquarie linked to bankrupt Chinese property developer:
Handan Golden Century, a developer based in the central province of Hebei, is struggling to repay 2.9 billion yuan ($506 million) in debts and its major shareholder Shi Yubao may have skipped town, according to reports in Money Week and Handan News.
Handan Golden Century was the guarantor for a trust product launched last month by the Sino Australian International Trust Company (SATC), which is just under 20 per cent owned by Macquarie.
The product, known as Changying No. 66, is backed by a 280 million yuan loan to Linyi Golden Century, which is also controlled by Mr Shi, according to the Beijing-based business magazine, Money Week.
More coverage of China’s credit guarantee system.
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