Chinese Homebuyers Are Returning Their Homes

In China, home buyers sometimes demand the right to return a home when a developer has violated the terms of a contract. Many home buyers also demand this if there's nothing wrong, but simply want out of an investment that it plummeting in value.

In Yulin city in Shaanxi province, 10 developers are now facing buyers who want to return their homes. The slowdown in the coal industry has hurt the local economy and many home buyers face tighter financial conditions. Developers are already in trouble due to the weak economy and a wave of buyers demanding their money back is more bad news.

In one case, 300 buyers claim a developer used illegal sales tactics. The developer required a ¥200,000 down payment, but later required a ¥300,000 transfer payment. Buyers felt they had to make the second payment to protect their non-refundable deposit. The developer claims that a third party investor selling the properties asked for that payment, not itself.

In another case, hundreds of buyers have returned homes due to the developer's failure to deliver on time. The developer is now extremely short on cash. Another has buyers demanding a return of their money because the developer sold them apartments with one bedroom, one kitchen, one bathroom and one living room, but left off the living room when it was built.

The government is helping buyers get their money back, but it also tells them to be on guard for fraud.

Opinion is mixed on the issue. One middle aged man said he can understand why people want to get their money back now that the value of homes is tumbling. A retired teacher said people need to bear the cost of decisions, whether the result is positive or negative. A construction firm owner said when prices were rising, everyone was taking out loans and buying, now that prices are falling, integrity goes out the window and people are looking for any way out. A senior media person said if morality is abandoned when home prices fall, the housing crisis will be followed by an even larger financial crisis.

Elsewhere, developers in Hohhot are under pressure too, cutting prices in the range of 10% to 15%. One engineering firm said many developers are paying their bills one to two months late, and in one case 2 years late. Debts can only be paid by taking possession of the property or seizing the owners luxury cars, similar to how debts are being settled in Ordos.

This may be the most extreme case of a buyer "returning their home." Some Beijing residents who won the affordable housing lottery (which had odds of 4000 to 1) have given up their right to buy. Affordable housing sells for 20% to 30% below surrounding properties, but thanks to falling prices, buyers are willing to forego this opportunity.

榆林房价急跌大批业主要开发商退房 围堵售楼处 (某城房价下跌20家开发商遇退房潮 售楼处被围)

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