In recent days, after the Chinese Communist Party (CCP) introduced a series of measures to rescue the housing market, several real estate companies in Henan and Sichuan have announced price increases. In response to this, mainland Chinese netizens have mocked, “With tens of billions of vacant houses, what are they raising prices for? Speculators are having hallucinations.”
On September 28, Henan Zhuokai Property Co., Ltd. announced that starting from midnight on September 30, the selling prices of their available units in the Changlv Jinsu Chen Garden project will be increased by 2%, with an increase of approximately 300 Chinese yuan per square meter.
The document mentioned that the Changlv Jinsu Chen Garden project has already reached the roof of the entire phase, with the completion of secondary structures approaching, meeting the conditions for quasi-ready-to-sell houses, and with sufficient construction funds and stable cash flow. After various inspections and assessments by the group, it was decided to raise the selling prices of available units by 2% as a key price maintenance project within the group.
Previously, Sichuan Chengdu Jiahe Xing Real Estate Development Co., Ltd. also issued a notice announcing price increases for all their residential projects currently on sale.
The announcement stated that Chengdu Jiahe Xing had considered the current dynamics of the Chengdu real estate market, as well as factors such as development and construction costs. After the board of directors of the group company conducted research, they decided to raise the unit prices of available units in five of their projects including “Jiahe Huafu,” “Jiahe Binhusing,” and “Golden Sands One” by 2% starting from October 1.
According to information on the Lianjia website, the reference average prices for “Jiahe Huafu,” “Jiahe Binhusing,” and “Golden Sands One” are 14,000 yuan per square meter, 23,000 yuan per square meter, and 32,500 yuan per square meter respectively.
Based on these figures, the prices per square meter for new units in these three properties are estimated to increase by 280 yuan, 460 yuan, and 650 yuan respectively.
As of September 27, it is reported that three real estate companies in Chengdu have officially announced a 2% increase in unit prices for all their projects starting from October 1. These companies include Sichuan Zhongmao Real Estate Development Co., Ltd., Chengdu Jiahe Xing Real Estate Development Co., Ltd., and Chengdu West Jinsha Lu Island Real Estate Development Co., Ltd.
Many Chinese netizens have expressed skepticism towards the price hikes, with comments such as: “With billions of vacant houses, why raise prices? Speculators are delusional. People are experiencing negative population growth each year, young people are not getting married, so why do we need houses? What is the logic behind raising prices for the lower class?”
Others have voiced support for the swift rise in housing prices, stating: “Hurry up and raise prices, I want to sell my house! As soon as my house reaches the purchase price, I will sell it immediately and never buy again.”
In 2023, the CCP’s Ministry of Housing and Urban-Rural Development revealed that there are over six billion housing units in China. According to several mainland media reports, this could accommodate over 1.2 billion people, indicating a severe oversupply of residential properties.
The recent announcement of price increases by multiple real estate companies in various regions is a result of a series of stimulating measures introduced by the CCP.
Since September 24, various financial departments such as the Central Bank of the CCP, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission have announced multiple policies to stimulate the housing market. These policies include interest rate cuts, reduction of required reserve ratios for deposits, lowering interest rates on existing mortgages, and unifying the minimum down payment ratio for mortgages, providing approximately 1 trillion yuan in long-term liquidity to the financial market.
On September 26, the CCP’s Politburo held a meeting affirming the need to stabilize the real estate market, adjust housing purchase restrictions, lower interest rates on existing mortgages, and support the activation of idle land resources.
Professor Xie Tian from the Darla Moore School of Business at the University of South Carolina said, “These measures will not be very effective because there is a severe oversupply of houses, with billions of houses sitting vacant. Additionally, 90% of Chinese people own their homes, so no matter how much stimulus or encouragement is provided, people are not likely to buy.”
Economic scholar Li Hengqing, currently in the United States, also told media that China’s property supply exceeds demand. It is generally believed that housing prices will continue to decline, and with the poor economic situation, even lowering interest rates and down payments will not rescue the housing market.
He continued, “Banks have accumulated mountains of bad debts from real estate development over the past two to three decades. Once again, as the central bank reduces the down payment from 20% to 15%, it means that 85% will have to be covered by loans, undoubtedly increasing the risk of unfinished real estate projects. The combination of these factors will inevitably lead to a collapse of bad debts in China, impacting the entire banking industry. The collapse of the entire financial system is imminent, this is a suicidal activity.”