Real Estate Slowdown Ongoing in Second and Third Tier Cities

FT Alphaville reports on a Standard Charter survey of 30 mostly small developers from Hangzhou, Lanzhou, Baoding, Foshan, Huangshi, Nanchong. Hangzhou is the epicenter for the current housing slowdown, so that may skew the numbers a little towards the pessimistic side, although if the recent news reports reflect sentiment, Hangzhou remains relatively optimistic.

China’s ever more precarious towers
Echoing this, 11 of our surveyed developers reported offering price cuts of up to 10% in the past quarter, and three offered bigger discounts. However, the price outlook is stable. 14 of the 30 developers expect flat prices in the next quarter, while seven expect continued mild price moderation. None expect a material price correction (Figure 2). Most believe a reversal of market sentiment is more important than discounts in turning the market. A number of our developers argued that it does not matter how much they cut prices, buyers are still very cautious.
There won't be major price cuts until it is clear that sentiment won't change. Until then, developers are going to hang on and hope for a sentiment shift.


  1. Many thanks for your blog!!!

    Your inside into the Chinese markets esp. for non Chinese speakers is greatly appreciated. From the outside, some data esp.the cement production/consumption in absolute and relative numbers is mind-boggling. Particularly if you consider the number of empty houses in China. What is your best source for real estate numbers esp. for vacancy rates? How many ppl visit your blog in a week? all the best from Europe

  2. On vacancy rates, most is privately estimated. the most recent report was from Southwestern University of Economics and Finance. WSJ:More Than 1 in 5 Homes in Chinese Cities Are Empty, Survey Says

    I posted some of the report here: China Has 50 Million Empty Homes Backed By ¥4.2 Trillion Debt

  3. I read the wsj article when it came out, thanks for the second link.
    I think it is fascinating that the imbalances in the Chinese economy were recognized (by Chanos, etc) a long time ago, the Chinese leaderhip also realised the dangers and promised reform (also a long time ago) and less depedance on investment or real estate bubbles, but
    the emporor is far away and the mountains are high
    and reform would at least temporally be painfull (decrease in cement, steel, construction businesses).
    It will be interesting to see how the Chinese real estate market will play out in the next months and years.
    best regards

  4. how many ppl visit your blog in a week?in a month?

    1. Maybe 500 in a month, about 15 a day at the moment.

  5. Thanks for your blog and your patient answers.