Baoding Farce Turns to Tragedy; Speculators Dump Properties One Month After Buying

In Home Speculators Don't Give Up, They Move, I covered the news of Baoding potentially becoming a subsidiary of Beijing, with government offices moved to the city to reduce crowding in Beijing. As soon as the news hit, property speculators rushed to Baoding, bidding up prices sharply.

Property agents in Baoding, in the northern province of Hebei, have been busy answering the phone lately. For the past few weeks, calls have come one after another.

Tong Yonghua, an entrepreneur and head of the Zhejiang Business Association of Baoding, said his organization has been showing around fellow businessmen from the eastern province over the past week and many of them were interested in buying apartments.

"Seven or eight of us association members have already put deposits down on some 50 apartments," said Tong, who is from Wenzhou, the unofficial entrepreneurial capital of the country. "This is the best opportunity in Baoding in years."

As I noted then, Wenzhou's housing bubble burst years ago and Zhejiang is the epicenter of several potential busts (Wenzhou is also in Zhejiang).

Now these speculators are learning yet another lesson and perhaps this one will stick. While the Baoding property market is not collapsing, the March-April price spike is deflating rapidly. Speculators who bought in bulk are stuck with depreciating homes and based on the article below, losses could already be 5% or more on homes bought at peak prices. They are trying to unload into a weak market and there are no other speculators willing to come in and take on bulk purchases.

保定：楼市量价齐跌 投资客急抛售 (Baoding Property Prices & Sales Tumble; Speculators Anxiously Sell)

Reporters in Baoding enter "Urgent sale", "package renamed" and other words, it was found hanging out through an intermediary such listings of more than 200 units, most of which belong to the investors to sell. However, between 6200 yuan offer basic -6600 yuan, more frequently than the end of March 7000 yuan price has come down significantly. However, the agency said that the current very difficult to sell these listings, outsiders can not take the basic disk, and Baoding people unbearable high prices.

At the same time, the current high inventory property Baoding, lower than expected at the moment of favorable policies, the overall risk of a property can not be ignored. Centaline data show that in January 2013 to November, the cumulative turnover of Baoding 1,509,190 square meters of commercial housing, Baoding monthly average of 140,000 square meters to go. According to the current salable area of ​​5.31 million square meters of computing, Baoding inventory to time up to 38 months, is 5-6 times in Beijing.