Stock Market Crash Causing Buyers To Back Out of Home Purchases, Home Owners Trying to Raise Cash, No Buyers

Here's a good reason for the government to be panicking about the stock market crash. The housing market is already being affected, proving that the boom in Shenzhen was stock market related.

The industry is on the lookout for a drop in Shenzhen's red hot housing market because buyers are already backing out on purchases made last month:
A shares plunged for three consecutive weeks, more than 30 trillion wealth has been wiped, which began this year spread to skyrocketing property market in Shenzhen.

A Shenzhen real estate industry insider to the "China Times" reporter said, Vanke, China Overseas, China Merchants some projects in the real estate investment and real estate, began to see customers who have paid a deposit come back to return the home. Customers of a commercial project in Futian CBD have begun to express their wishes would like to transfer their ownership.
Prices are already coming off as well:
From the end of June, the Shenzhen property market turnover decreased, the existing home market increased properties for sales, offer prices also began to cut, such as existing home offers in Qianhai have fallen by 3-5 percentage points.
Buyers say it's the stock market:
"Recent customers do show signs of a decline in housing demand, we urge customers to deliver the down payment, the customers ask for delayed payment because their money is stuck in the market." A Dongguan, Fenggang developer highly dependent on Shenzhen customers told reporters.
It's not only high-end properties being affected, the entire market is seeing a slowdown in demand. Other home buyers are taking a more cautious attitude due to the drop in stocks.
"Some buyers really have funding problems because their money is in the stock market, when the stock market was high they intended to buy a house, but they did not have time to sell and are now underwater."
Due to widespread use of margin, some home buyers are financially impaired.
"With regards to the stock market crash's impact on the real estate market, most developers have shown concern, although the phenomenon of canceling home purchases has not yet appeared in large scale, it could erupt in the future." A Vanke insider said.
There is history here:
2007 Shenzhen skyrocketing housing prices also lead the country after the 2008 financial crisis, the Shenzhen property market at the same time as the stock market suffered a rare crash, first appeared buyers check out tide.
The article mentions, it was only last month that Shenzhen home sellers were the ones breaking contracts with buyers because prices were rising so fast.

Shenzhen is also home to many companies that list on the ChiNext, so the tech boom and subsequent crash affects the market.
There are many existing home owners trying to sell their homes in the past couple of weeks to raise cash, but no one wants to buy. There is a price but no market. Buyers wanted cash, but buyers don't have it and can't borrow it:
"The last two weeks disc release does add a lot, some owners eager to sell cash." Cheung real estate property consultant Xiao Zhu told reporters recently Longhua Tong Road ground at the same time there are three owners put disk, require the buyer one-time payment and funds should be in place within a week. However, the house is not worth hundreds of millions of loans, this is very difficult to find buyers, so the house is no deal.

..."We also met the sellers who urgently needed funds, and require customers to pay the full amount in cash, or at least the first payment within a week to be paid in full." Sakata World Union real estate property consultant told reporters recently in the area of ​​second-hand housing plate increased but buyers but significantly less.
The rapid increase in prices from weeks earlier has killed the market:
"Now there are showings to customers, but home prices were inflated, there is a price but no market."
Banks are also tightening up down payment requirements (to 40% in some cases) in light of what's happening. One realtor thinks sales could drop 20-30% in Q3.

And the end of this story is this survey on readers' current attitudes towards the housing market.

iFeng: 股市财富缩水传导至楼市 未来或爆发大规模退房潮

Added: Shanghai too. Chinese selling homes to cover stock losses: local media

1 comment:

  1. What a joke this market is. Why bother with fundamentals when central planners try to control the outcome.