Equity turmoil swirls around realty sector
Updated: 2015-07-10 06:45
By WU YIYAO(China Daily)
The aftershocks from the stock market turmoil are starting to hit the property sector.
Some investors are rushing to sell their homes or ditching plans to buy property after piling up losses when the Shanghai Composite Index went into free-fall over the past three weeks. It has dropped by more than 30 percent since mid-June.
On Thursday, it at least reversed weeks of losses to close 5.76 percent up at 3,709.33 points.
Yet this rally might have come too late for those investors who have already put their homes on the market.
Several real estate agents in Shanghai have reported that more apartments and villas are up for sale as investors try to cut their losses by selling their properties.
Cui Aijun, a real estate agent at Shanghai Junda Property Services, said that four of his clients are "urgently" selling their homes after losing money trading in stocks.
"One property was just bought early this year," Cui said. "In fact, some investors sold their stocks to buy properties in March and April. But now we see people selling properties after piling up losses in the stock market."
Homeowners looking for a quick sale usually pitch their properties 10 percent below the market average.
One villa in the swanky Shanghai's Pudong New Area is up for sale at 17 million yuan ($2.74 million), while neighboring properties are on offer at 19 million yuan. A property trading platform, fang.com, reported that the owner of the villa had experienced "significant market losses".
During the past six months, the residential sector in Shanghai has been extremely buoyant.
According to the global real estate firm Colliers International, high-end property prices in the city's major locations increased 17.5 percent in the first half of the year compared to the same period in 2014.
Colliers expects prices to rise a further 20 percent in the second half as government policies aimed at stimulating the property market kick in.
In Guangdong province, the China Times reported that more than three residential projects there have seen potential buyers pull out because of stock market losses and forfeit their deposits.
Many of the people who have decided to go ahead are now buying cheaper property.
"With my 400,000 yuan as down payment, I could have bought a three-bedroom home," Lei Zhengdong, 32, a telecommunication technician in Shenzhen, said. "Now I am only able to buy a two-bedroom home after losing 80,000 yuan trading stocks."