Hangzhou To Hide the Decline? Greater Than 15% Price Declines Will Not Be Recorded; Developer Refuses to Believe Govt Will Watch Them Die; Another Asks If Govt Is Trying To Kill Them

Two articles on the Hangzhou market. One is about a new policy that will seek to massage the housing data, presumably in an attempt to shift market sentiment. The other shows the two diametrically opposed opinions in China's housing market. On the one side are the teetering developers and real estate agents in Hangzhou who fear for their business and see the government being the same dire straits; a bailout must be coming. On the other side are those who see the central government opposed to policy easing. Additionally, Hangzhou serves as a bellwether for the national real estate market and the government does not want to reinflate the bubble, so no rescue is coming beyond some "fine-tuning."

The first article: Taking a page from the climate scientists who hid the cooling trend in global temperatures, Hangzhou government will hide the cooling trend in the real estate market. Any price decline more than 15% below the list price will not be entered into the online registry. Developers are not forbidden from cutting prices and no sales will be stopped, though at least one developer expressed concern that advance sales permits may not be issued if the price cuts are deemed too large. The second article below likens this policy to the stock market daily price limits. Update: This article (杭州出限降令降价上限15%) says that in order to get sales into the system, developers can reapply to lower their listed price, but this takes 7 to 10 days. The net result of the policy may be to delay sales and force developers to list more realistic prices instead of relying on big price cuts.

The second: Hangzhou held a 4-day real estate exhibition recently. Attendance was 230,000, but only 32 homes were sold. These numbers are an improvement from 2013 and 2012 though. One state-owned developer said that price cuts cannot cure the market. The government must step in and ease buying restrictions, ease borrowing limitations, reduce bank reserve requirements, allow people to borrow for second and third homes, etc., in order to instill confidence in the market. The developer also said the media and experts were giving one sided reports, causing more chaos in the market, while buyers are more strongly adopting the wait and see attitude. He said buyers have no bottom line, if you cut 10%, they want 15%, if you cut 15% they want 20%. His firm has used price cuts of 10% and he hasn't sold a home in 3 months. He said with government support, they can survive, but small private firms are not so confident.

A real estate agent said that even if sales pick up, price cuts will kill the firm. He said the government is more nervous than the industry because if land sales stop, they might not even be able to pay the wages of government workers. He expects, and hopes, the government will do something to rescue the market.

Dr. Ye Hongwei, Assistant Director of the Real Estate Investment Research Center, Zhejiang University, said the national government would not ease policy. He said there are really only two areas that might ease: buying restrictions and credit limits. The credit limits are set at the central government level and are unlikely to ease. The buying restrictions are set locally, but so far only small cities have enacted these policies. Wenzhou has seen prices fall for 30 straight months and there has been no real easing (aside from a small change last August). He said easing in Hangzhou is unlikely: it is a sensitive real estate market and a bellwether for the national real estate market.

Finally, another developer bluntly told reporters: the Chinese real estate market is not a fully free market, if the government wants to intervene they can. Also, these officials have a bright future, they don't need this risk, so a big policy easing is unlikely.

Related: Real-estate tycoon lashes out at China government
Song Weiping, who is selling most of his stake in luxury-property developer Greentown China Holdings and is stepping down as chairman amid a worsening market downturn, told a news briefing that local and central governments were to blame for the industry's problems, having interfered too much in the market.

......Mr. Song said he is tired of operating in an environment in which the market isn't free.

......Mr. Song also vented his frustrations with Hangzhou and other local governments that sell land to developers at high prices and then force them to use some of the land for low-income housing. "How could they expect us to build social (low-income) housing on the same plot of land that costs 50,000 yuan (about $8,000) per square meter? Who would these homes be distributed to?"

"Beijing and Shanghai are the same," said Mr. Song. "Are they trying to kill us?"
The ultimate cause of the problem was excessive credit growth. The subsequent steps were all aimed at dealing with that policy mistake. Similarly, after 2008 the government encouraged people to buy cars to boost economic growth, then in 2012 everyone is complaining about congestion and rising pollution levels in Beijing. Now this is the headline: China to scrap millions of cars in anti-pollution push. The bill for 5 years of malinvestment is coming due.

 After experiencing the "first drop storm", Hangzhou property market but also involved in the "limit down order" whirlpool. Recently, there is news that started from May 22, if the actual transaction Hangzhou housing prices more than 15% below the record will not be able to achieve net signed.

Many industry insiders believe that restrict the behavior of real net signed to limit developers to cut prices. However, Hangzhou Price Bureau and other relevant departments immediately explained that through the media, these requirements is to regulate commodity housing sales price reporting record behavior, not prohibit price.

"Limit sign is not restricted net price, is still hard to say, but now the concern is to limit net signed, if the price of re-filing, how to operate? Especially re-declare the price is lower than the previous record price of more than 15% will not be allowed to pre-sale? "Hangzhou, a relatively well-known local developers responsible to the" Daily Economic News "reporter expressed his confusion.

It is worth noting that the sale of real estate currently available Hangzhou reached 125,000 units, ranking historic highs, and land assets is the emergence of several months of declining turnover phenomenon. In this regard, the Central Plains real estate chief analyst Zhang Dawei said that this actually reflects expected changes in the property market, the local government from the anti-surge into the anti-crash, especially in such a high inventory of Hangzhou city.

Over 15% of the net price limit sign

Recently, various messages on the property market regulation policy came to relax from time to time, especially in the market is concerned that the introduction of price cuts in Hangzhou filing system. May 23, Hangzhou, prices, housing authorities jointly issued regulations, housing prices all over the record price of 15% of the price, the network will not be able to sign, the price needs to be reported, the market interpreted the move as "limit down to make."

Many people believe that limit is actually restricted net signed developers to cut prices in order to save the property. However, Paul lived in Hangzhou Hangzhou Price Bureau and the Housing Authority through Hangzhou, the local media said that this requirement is to regulate commodity housing sales price reporting record behavior, one of the measures to promote the orderly real estate market, not limited to acts or down. " limit down to make. "

Hangzhou Price Bureau Office Fangya Chun said: "The current real estate pricing remains the main developer (this requirement) price is not prohibited, nor is it allowed to cut prices.."

Hangzhou, a local developer, told reporters that the above provisions, if implemented, will not bring them a substantial impact, and its real estate when the market is more rational, the price cut will not exceed 15%, the impact is relatively large number of price cuts over 15 % of real estate. Accordance with the process, the developers need to re-declare, not signing period, "will increase the workload of many."

Another developer is responsible to the reporter expressed concern concern is now being restricted net signed, if the price of re-filing, how to operate, especially re-declare the price is lower than the previous record price of more than 15%, will not will be allowed to pre-sale? If you allow this much time in the middle?

In fact, this year on March 25, the Hangzhou Municipal Government held a forum on the real estate business, the meeting stressed the need to maintain a healthy and sustainable development of the real estate market is stable. Meanwhile, relevant departments should strengthen and Hangzhou, real estate companies, financial institutions and media interaction, information sharing, to prevent systemic risk.

According to local media reports, Hangzhou, April 22, 2014 in Hangzhou Development and Reform Commission in the first quarter of economic analysis was suggested that the risk of the real estate market to actively prevent, significant market rumors, the first time to clarify, stabilize market expectations . In addition, the forecast system for major real estate companies price adjustment policy, housing prices in major price adjustment before the release, must notify city departments.

Prevent real estate slashed prices?

In Dawei opinion, Hangzhou, the introduction of the price cap is set to 15%, instead of the more tangled the current property market situation is not unrelated. May 17 to 19, known as the property market benchmark known as Habitat exhibition was held in Hangzhou, this exhibition has 39 real estate development companies, the number reached more than 1,400 booths, the scale has been reduced compared to last year. According to local media reports, Hangzhou Exhibition Habitat 32 housing units traded four days.

Right now, with the traditional sales season brings various developers pushed to increase, market inventories continue to increase. Data show that as of May 24, the main city of Hangzhou inventory reached 59,132 units, 57,553 units last week's (May 17) new 1579 sets.

The whole Hangzhou (Xiaoshan and Yuhang, including two districts), the Hangzhou transparent network data show that as at 19:00 on May 25, Hangzhou real estate listings currently available for sale up to 125,000 units, including residential 8.38 million units, both living in historic highs.

Dawei that restrict network signed Hangzhou initiatives, reflecting the local government wanted to stabilize the real estate market in mind, the current inventory Hangzhou property market remains high, the government worried that prices appear cliff-style slump, "to prevent sudden sharp decline in individual properties, to bring to market panic . "

Today Hangzhou risk rates continue downward. According to the National Bureau of Statistics announced on the 18th, in 70 cities nationwide, and in April a total of eight cities in the new commercial housing prices fell, including four in Zhejiang Province. Hangzhou, the largest decline, down 0.7%, down by 0.4 percent in Jinhua, Ningbo decreased by 0.2%, down 0.1% in Wenzhou.

Market analysts believe that, under the high inventory levels, market sentiment is strong, the prices are at risk of accelerated adjustment in the next period of time, the real estate market will continue to slump. May 23, the largest local housing prices Hangzhou Greentown was acquired financial record, at a news conference, Greentown Song Weiping, chairman, said, "Now is when the real estate trough."

Hangzhou high degree of dependence of land

"If you continue to cut prices to some extent will affect the land, especially in the developer's enthusiasm." Insiders said this analysis to reporters.

Data show that the land market in Hangzhou in January after experiencing the "climax" nosedive. February, the total amount of land transactions in Hangzhou city of 9.2 billion yuan, down 72.8%; into March, the city's only eight land, the total turnover of approximately 3.8 billion yuan, up and ring data are likely to drop sharply, the total turnover of more shrunk first month four.

At the same time, the land premium also declined. Comparison of the data shows that the average main city of Hangzhou land premium was 9.3% larger than last year dropped 20.9 percent average premium rate.

April is equally bleak. Hangzhou transparent property market data Institute released in April, the land market stumbled Hangzhou, the Hangzhou area (the main city, Yuhang District, Xiaoshan District) is just four blocks traded, and all direct transfer to the reserve price. Among them, the total turnover of the urban land one, transfer area of ​​3.4 hectares, the construction area of ​​270,000 square meters available, turnover 1.49 billion yuan, the highest single month since 2013 turnover low.

This deserted land market conditions continued into May. May 5, Hangzhou ushered first land auction in May, due to the transfer of the two providers to have only one unit of enrollment, and therefore increases one million yuan directly deal.

"So far, the government introduced the policy does not significantly improve the market and want to wait and see." For the current status of the property market in Hangzhou, Zhejiang Province, a real estate person in charge of the "Daily Economic News" reporter said. Year, the official told reporters that the company plans to take to for subsequent development.

Dawei said the deserted land market in Hangzhou, on the one hand due to the entire real estate market in the doldrums, developers get little interest; the other is subject to inventory and impact of the current high volume of new supply, the supply and demand balance on the market considerations, the local government must also take the initiative to slow down the tempo of land transfer degree.

Recently, the third-party market institutions with policy advice Research Center released "45 property purchase urban land finance dependence analysis report," 2013 land finance dependence over 50% of the city of 31, Hangzhou is the purchase of city land finance dependence cities with the highest dependence of up to 156.4%.

开发商吐槽:降价也是等死 不信政府见死不救
Developers' wait bailout "mentality finally essence echoes: According to the Hangzhou Municipal regulations relevant government departments, from now on, if the real estate transaction on more than 15% below the record price, it will limit the network signed by technical means. This means that the rumors of a "limited descending order 'will begin.

The just-concluded annual Habitat Exhibition in Hangzhou, despite the popularity still busy than last year, reaching 230,000 people, but the transaction is not satisfactory, only four of the 32 sets of transactions. The first day is dismal, only a set of transactions. Habitat for the exhibition, 39 exhibitors has taken great pains, recount, discounts, beauty catwalk, live concerts, stage by turns.

Ningbo developers Chen Ge Jian (pseudonym) told reporters that a simple price reduction has been unable to save the property market, the government must introduce bailout policies, there are some loose in the purchase limit credit terms, such as bank reserves down, relax two sets of three loans, to the real estate market to boost confidence, thereby activating the market, otherwise, the real estate market situation will be more severe.

"Three months is not selling a suite"

Chen Ge Jian (pseudonym) told reporters, in fact, not the developer does not drop the price of the issue, but then the price can not solve the problem, this is the crux of the problem. He said that now is not only the real estate business had a hard time, under the overall economic environment is everyone is struggling. First, the real economy is affected by shocks to the property, so that the property market weakness. In addition, a number of experts, scholars and the media irresponsible, one-sided or not rigorous sound, making the real estate market information more asymmetric market chaos intensified, affecting the judgment of decision makers, while buyers wait and see mood is also thicker, these elements are important factors affecting the property market.

Chen Ge Jian said that in such an environment, buyers have no bottom line, you fall scenes, which he hopes to eight fold, even Qizhe discount for each purchase, obviously, the price has not solve the problem. He admits that the company is also engaged in the% off promotion, but did not receive the actual results, "has not sold a suite of three months." He said.

As a state-owned enterprise, Chen Ge Jian said that they still have some strength to cope with the market. For some private, especially small businesses, the confidence is not so full.

Zhejiang real estate agent who requested anonymity, told reporters bluntly, in fact, the government is more anxious than us. He said that if the real estate market continues to this malaise, causing the land can not be sold, then, may have even unable to pay wages to the government, so he believes the government will bailout. He admitted that for them so that small businesses, the price is actually dead, so its better then carry carry, perhaps the government will bailout, then the business will inevitably took a dramatic turn.

Volume and price down situation is irreversible

Zhejiang, a real estate in the "China Enterprise News" reporter said, real estate is a capital-intensive industry, often indeed affect the whole body, so the real estate industry say that finance is another stand up leg is the meaning, the visible The importance of real estate funds. He said the straw that broke a real estate enterprise is not uncommon, as an outsider, often only see the glamorous side of the real estate business, but tough people do real estate only they know.

I love my home in Hangzhou Business Group Director of Marketing Planning Center Week package army seems to early May Beijing housing prices fall is another landmark event.

Zhou Jun said the package "51" after the Beijing property market for the first time in nearly 10 years, trading volume fell sharply, marking the national property market volume and price down irreversible.

According to Beijing Municipal Construction Committee official data showed, May 1 to May 3, Beijing commercial housing a total turnover of 169 units, compared to last year, "May Day" holiday reduced 78.9%. The "51" small holiday in the past seven years, the addition to the 2008 turnover of 410 sets, the rest are kept in thousands of sets of the above, and 168 sets the minimum value of sales in 2008 compared to this year also shrunk by 6 percent.

In fact, not only Beijing, with a total turnover of the "May" market 54 cities fell by 32.5%, which also includes a lot of running and the amount of real estate markdowns. Zhou Bao Jun told reporters that the country faced volume and price down prices irreversible situation.

Full deregulation of basic hopeless

Tianjin property market will be relaxed seem to give developers a glimmer of hope.

May 13, circulated an online micro-Bo said, the Tianjin municipal government will release the third homes or purchase, allowing locals to buy 144 square meters of housing over the third set of six districts in the city or in the city's six districts purchased outside the third set of 90 square meters of housing, and corporate enterprise registered in Tianjin, non-natives are limited to purchase. But authorities said that this policy is still in the research stage, there is no specific policy, there is no exact information available.

Previously, including Nanning, Wuxi, Ningbo, Zhejiang Tongling, Anhui and other places have introduced relevant "bailout" policy.

Week package army in the "China Enterprise News" reporter, said that although there have been some loose several places, but the possibility of complete deregulation policy is unlikely. He said the deregulation of the country from the current policy, basic or promote just, investment demand significantly inhibited.

Deregulation of basic national policy is unlikely. Assistant Director of Real Estate Investment Research Center, Zhejiang University, Dr. Ye Hongwei, said in an interview with reporters, deregulation nothing more than two, one is the "credit limit" is a "restriction", "credit limit" is the national level, from the current policies and information feedback, the possibility deregulation is unlikely; and "restriction" is a local government can control, do not rule out local government to take some fine-tuning measures. But the situation in Hangzhou, the main city of Hangzhou relax "restriction" policy is also unlikely. He said the city of Hangzhou is sensitive, is one of the vane national real estate market. Some relaxation of the restriction from the current view of the city is a small city, Wenzhou City, Zhejiang even belong, prices have declined for 30 consecutive months, without any indication that it be relaxed, Hangzhou even impossible.

And an industry, told reporters bluntly, plainly, China's real estate market itself is not a fully market-oriented behavior of the industry, the government can intervene in the market; addition, government officials have a good future, they do not need to take the risk Therefore, the possibility of full deregulation of the property market really is not.

1 comment:

  1. The Chinese Market appears like it is crashing, but people are not aware of it...since the sales prices which are too low are just being hidden. We'll all know about the truth when developers start to go bankrupt...and the bank runs start...and with the shadow banking system to deal with as well...I think we're in for chaos...sooner rather than later...just my opinions...