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Home prices decline in suburbs

By Hu Yuanyuan and Wang Ying  (China Daily)

08:42, October 25, 2011

A group of early homebuyers, who purchased their apartments from Longfor Properties Co Ltd, protested price cuts and demanded a refund in Shanghai on Oct 22. Lin Qing / For China Daily

BEIJING / SHANGHAI - Home prices in China's key cities are falling more quickly as property developers, under increasingly tight cash-flow pressure, are cashing in as pessimistic forecasts are issued for the property market.

Though data from the National Bureau of Statistics show the month-on-month price remained unchanged in Beijing, Shanghai, Shenzhen and Guangzhou from July to September, home prices fell from 30 percent to 50 percent in the suburban areas of these cities.

Chen Li, head of China Equity Strategy at UBS securities Co Ltd, said fluctuations in the property market may pose the biggest challenge to China's economy next year.

"The decline in home prices, I believe, is just beginning. And this price adjustment will cut deeper than was the case in 2008 to 2009," Chen said.

The higher-than-expected price decline has triggered strong protests from earlier buyers.

In Shanghai, nearly 300 agitated people stormed the sales office of a property project in the Jiading district on Saturday afternoon, shouting for an immediate refund as the project price slumped up to one-third since they bought the houses.

The early homebuyers, who purchased properties from Longfor Properties Co Ltd, felt they had been tricked when they learned the average price of the project dropped from a peak of 18,500 yuan ($2,900) a sq m to 14,000 yuan a sq m, Shanghai Youth Daily reported.

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