Home Prices and the Property Crisis: How Chinese Developers Are Enticing Buyers

Home Prices Continue to Decline

The property crisis in China has led to significant home prices decline, particularly in major cities. As prices have fallen for 14 consecutive months, developers are now resorting to creative perks to attract buyers.

Developers Turn to Aggressive Incentives

In response to the economic downturn, state-backed developers and local governments are struggling to stabilize the property market. This month, China Merchants Property announced enticing offers, including flight lessons and a stake in a private jet for homebuyers. Xiaoxi Zhang, an analyst at Gavekal, noted that developers cannot reduce prices directly due to government controls, prompting them to provide valuable incentives instead.

• The Central Bank issued a 300 billion yuan relending facility to support local governments.
• Local measures include allowing non-local buyers to gain residency and other perks.
• Sales by top developers dropped 36.4% month on month.

Outlook on the Housing Market

Despite attempts to stimulate demand, the outlook remains bleak, with home prices in cities like Beijing witnessing a 32% year-on-year drop. Analysts suggest that without larger support from the central government, these price pressures are likely to persist.