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Shanghai developers slash home prices

By Sun Xiaojing (People's Daily)

15:48, October 28, 2011

Edited and translated by People's Daily Online

Shanghai's property prices have dropped sharply in recent weeks, with certain apartments being sold for one-third of their original prices.

"In fact, Shanghai's housing prices have been falling since March this year. So far, the prices of apartments in 50 to 60 real estate projects have dropped by more than 10 percent," said Fu Qi, a senior analyst at China Real Estate Information Corporation.

Fu said that real estate developers did not cut home prices because of cash shortages. Certain developers may be short of cash, but most of them can solve this problem by other means instead of slashing home prices.

Moreover, it is mostly major developers that have conducted price cuts, so the possibility of cash shortages can be ruled out.

"They have lowered home prices probably for the purpose of accelerating cash flow back. Listed companies tend to increase their cash on hand before the end of the year in hopes that strong earnings figures can boost investor confidence," Fu said.

Many local residents have rushed to buy houses due to the price cuts, which will inspire more real estate developers to lower home prices. Fu predicted, "More houses will be sold at discounted prices by the end of the year."

However, it will be a gradual process. The considerable increase in the number of homebuyers indicates popular satisfaction with the discounted prices.

"Their satisfaction means that the housing price cuts may not last long," Fu added.

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