Changsha: Almost Every Building is Falling in Price; Real Estate Firms Turn to Lending

Second tier city Changsha is the capital of Hunan province and a report says all the new buildings coming into the market have at least small price reductions in the range of 100 to 300 yuan per sqm. There are some large cuts in individual cases, but this is actually one of the first reports of a city seeing prices cuts across the entire market.

(FYI: Changsha is the home of Sky City, a 2700+ foot (838 meter) tower that would be the largest in the world upon completion. The government has stopped construction on the grounds of the project lacking environmental permits.)

There are lots of real estate projects in Changsha, no shortage of supply, but with banks tightening lending and credit difficult to obtain, some real estate firms are taking cash from property sales and turning into high interest lenders for other developers.

Small developers survive only due to high interest loans. They pay interest and pay salaries first and owe money to the construction firms, who owe money to the materials suppliers. One construction executive said if these firms can't sell their properties, the capital chain will have a problem— in other words, a systematic crisis. This financial pressure turns into pricing pressure in the market for homes as developers race to recoup capital.


长沙成二线城市变盘样本 几乎所有楼盘加入降价阵营

A growing number of second-tier cities to join the ranks of the lower prices.

Since April, the weekly volume of new homes in 1500 in Changsha sets fluctuate, compared to the same period last year cut directly compared to the full year 2013, sales volume fell 60%. And in some real estate prices down 30% straight after the city footing developers are disrupted, and now almost all properties have joined the small price camp.

"The market downturn was mainly due to two factors, first tightening of bank credit, first mortgage generally go up 10 percent, buyers choose to wait and see; secondly much inventory, serious oversupply of houses do not sell." Several developers to Changsha Reporter analysis of exactly the same reasons, but they believe that as long as the funds can be quite hurdle relax after credit volume will return to normal.

However, the market adjustment period may be longer than the developers imagine, funding pressure of reality has let developers find it difficult to support. Hunan Province, a construction company executive told reporters, basically small developers are currently supported by usury, the industry is difficult to melt into the general project funding, and now in addition to relying on private funds, yet do nothing.

Usury "gridlock"

"Recently a friend received a call, I'm not looking to buy land, that is, to borrow money." Hunan local housing prices ginger boss told reporters that since last year, after the end of the project in Shaoyang, he began to wait and not buy, a hand the accumulation of cash, is now ready with a friend co-founded finance company dedicated to the transformation of housing prices usury.

"The basic transformation project done usury go," Jiang said the boss, no shortage of projects currently on the market, the banks have tightened, lack of funds is usually a monthly interest rate financial companies to focus on two points of interest income came in , and then to put out five points of interest. Developers are typically borrow short-term, one month, three months, 50 million yuan put out a monthly interest is 2.5 million, compared with its own development projects is also cost-effective.

However, the turnover of real estate through private lending hidden risks, has exposed in Wenzhou mode. The reporter has learned that the current interest folk are usually less than 1 million monthly interest rate of 2 points, more than 1 million of interest is 3 points or 5 points, a lot of housing prices clearly can not afford.

"By 5 points, a gross turnover of interest are now dead, but the developer must risk gamble, was immediately loaned to die, to die slowly by, if not on, at most, be returned to the principal or Take a house mortgage, high interest protected by law anyway. "Jiang boss where Changsha Shaodong, housing prices have seventy-eight small boss on foot.

"A few years ago usury earned three or four million, the minimum is 6 points put out, and finally back to the confiscation of more than one million, are now afraid to do." Hunan chairman of an investment company, told reporters that they also There are three projects in development, private interest is too high, the recent find funds in Shenzhen, preparing private equity funds and credit P2P network platform.

But reality is more difficult to imagine that the chairman admitted that the industry is difficult to melt into the general project funding, and now in addition to relying on private funds, yet do nothing. The reporter has learned that the current development banks generally tightened credit, especially small and medium housing prices, not the prime location of the project, the bank does not consider lending.

The industry believes that, once Difficult Days sales outstanding, it is difficult to support the developers, housing prices in 2012 in Changsha running, will sooner or later collapse phenomena occur again, the fastest in the second half of this year, at the latest next year will erupt.

2012, Changsha has happened in more than a dozen developers funding fracture, housing prices collapse or boss on foot incident, because involving usury, culminating in a liquidity problem.

Hunan Province, a construction company executive told reporters, basically small developers are currently supported by usury, debt default serious developers owe builders, builders owed material suppliers, private loans to pay the interest each month, workers wages are not in arrears, if the house sold, funds can not be withdrawn from circulation, the whole chain of funds will go wrong.

Bargain price loss

Housing prices in the capital chain direct consequence of the pressure can only be price.

Changsha publicity this year a "Pujiang 2000 yuan / square meter," the COCO honey City project, a drop of 30%. The project is located in Changsha Hexi New Zone Yanghuyuan Wetland Park estate in Sichuan last year captured the blue king, the floor price reached 4,841 yuan / square meter. Insiders estimate, plus construction costs, the project was sold for at least 7,800 yuan / square meter in order to preserve capital.

However, after the Lantern Festival this year, the price of the license plate in a big play from Price 8000 yuan sixth straight to the head, causing owners rights. Sales staff told reporters, is currently being sold in 57 square meters with two bedrooms, amounting to less than 40 million yuan, 69 square meters Sanju, the actual area of ​​over 80 square meters, priced at less than $ 500,000 are "loss leader for trading. "

"Blu-ray does not familiar with the foreign monks Changsha, water and soil, pre overly optimistic, high-priced land grab late and too reckless, slashing prices." An industry believes that trying to help developers cut prices fired the first shot for the future to break in Changsha Brand Extension soil to lay the foundation.

"COCO honey City" and "fire-sale" disturbing the original fairly quiet property market in Changsha. Vanke gun from an opening Egret 8500 yuan / square meter with fine decoration, has now dropped to 6300 yuan / square meter.

Changsha Metro holding company marketing plan is responsible for problem solution Liu told reporters that the current real estate Changsha general price cut of about 100-300 yuan per square meter, most of the way is to use a special room to push kicked upstairs.

Reporters at the scene learned that belong to the Riverview Room Vanke Golden Mile Hong, also from the highest 12,000 yuan / square meter, now the price dropped to 8,000 yuan from top to bottom, but sales are still not ideal, opened last November, the two buildings are still not part of sold out.

"Housing prices listed are generally more focused on capital turnover rate, so rather lower profit margins, but also to ship as soon as possible." Bai Zhong Center Director Liu Xiang network Tencent large estate that when the market crisis comes, who is the fastest, who can live down, the great task of enormous corporate sales this year, the annual price grappling inevitable.

240,000 sets of inventory pressure top

Depressed market sentiment continues to spread, developers have chosen diving price, trading volume due to fall into the abyss. Changsha Real Estate Research Center data show that a quarter of this year, Changsha (including 4 counties) New housing a total transaction area of 3.86 million square meters, down 19.53%, residential average price of 5669 yuan net signed / square meter, which belong to the urban areas Region VI net signed area of 2.4 million square meters, representing a decrease of 28.9%.

"Chopped worse than the waist, now trading volume of the market is only so much cake than last year is smaller, but the cake more people this year, only the price in order to grab the cake." Liu Bai Zhong told reporters that the recent most headaches is director of marketing their volume shrink serious, but the amount is increasing development, because the pressure is too great, the recent emergence of a marketing manager leaving tide.

Make developers worry that the sharp rise in Changsha inventory trends. Changsha Bureau of Statistics data show that as of April 1, the city's six districts in Changsha area of ​​25,723,400 square meters of commercial housing inventory, inventory total units close to 240,000 units. If the county plus four larger inventory.

For Changsha property prices are not high, the crux of the problem is that the supply is always excessive. Reporters statistics, currently the only ocean about 7 square kilometers of Lake Area small area, there are 17 projects under construction, the supply of at least 30,000 sets. 2013 film area sell a 11 land has doubled year on year, in 2014 and plans to go beyond 2013, to sell 998.32 acres.


April 18, "the State Council on the overall urban planning Changsha approved" announcement, compared to 2003's "master plan", Changsha city planning regional expansion nearly doubled, from 2,893 km2 to 4960 km2 expand. In contrast, the total population in 2011, Changsha, just over seven million, six districts within the resident population of less than 4,000,000, the current annual increase of Changsha population less than 100,000.

"This year more than eighty percent of home buyers just need to be true." According to Liu Bai Zhong understand, Changsha university graduates annually into more than 100,000 of these people work two or three years there were housing demand, as well as the relocatees and improve the type, and around the city, the provincial capital of Hunan, the state school for the children in groups and buyers currently living in the north of Guangzhou-Shenzhen Hunan return home purchase.

"But no one could have anticipated just how much incremental demand can digest, the only certainty is that the huge supply of both depth adjustment will Changsha property lay hidden." An industry analyst laments.