China’s economy continues to decline, and the real estate market is in a slump, with more and more small and medium-sized cities experiencing housing prices dropping to “cabbage prices”. In some areas, the total price of bare-shell houses is as low as 160,000 yuan (RMB). Even leading real estate developer Vanke has launched a “buy one, get one free” promotion at a property in Dongguan, Guangdong.
According to Time Weekly, in discussions among young people about cities like Hegang, netizens in Jiangsu, Zhejiang, and Shanghai have found their own version of “cabbage houses”. Towns like Zhenjiang in Jiangsu are also considered low points for housing prices in this region.
Since 2019, fourth-tier cities in Heilongjiang like Hegang have seen housing prices hit rock bottom, with properties selling for tens of thousands or even as low as 19,000 or 15,000 yuan. This low pricing has made Hegang synonymous with a depressed real estate market.
Reports from mainland media indicate that in the urban area of Zhenjiang, there are second-hand houses priced around 100,000 yuan, and high-end neighborhoods have average prices where one can buy for around 5,000 yuan per square meter.
Local real estate salesperson Wang Huijie mentioned that there are plenty of houses priced around 4,000 to 5,000 yuan per square meter here, highlighting that although it might not compete with the one or two-bedroom houses in Hegang, it can be considered a low point for housing prices in the province.
Wang stated that in places like Baohua Town and Development Zone near Jurong, adjacent to Nanjing, the average new housing prices are around 7,000 yuan and 4,000 to 5,000 yuan per square meter respectively, even lower than in North Jiangsu.
Data from China Index Academy shows that in June 2024, the average prices of second-hand homes in the top ten cities fell by 6.18% year-on-year, with the largest drop in Wuhan at 10.14%, followed closely by Nanjing and Chongqing (main urban area) with drops of 9.38% and 8.22%, respectively.
As China’s real estate market continues to decline, more and more small and medium-sized cities are seeing housing prices plummet to “cabbage prices”.
An article on mainland public account “Zhi Valley Trends” on July 6th pointed out that based on media reports, social media exposure, and housing market data, at least 95 cities in 25 provinces or municipalities including Heilongjiang, Jilin, Liaoning, Sichuan, Fujian, Henan, Hebei, Guangdong, Guangxi, and even neighboring regions like Chongqing, Tianjin, and Beijing have experienced a “Hegang-ization” phenomenon.
Amid an overall negative housing market environment, real estate developers are facing inventory pressure, leading them to come up with various marketing strategies. Even top Chinese real estate developer Vanke recently launched a “buy one, get one free” promotion at a project in Dongguan, Guangdong.
The promotion at Vanke’s Century Waterfront project in Dongguan lasted from July 12 to 28 this year. The marketing staff at the estate mentioned that the “buy one get one free” offer was limited to large units above 140 square meters, with buyers of these units eligible for a complimentary sea-view apartment in Vanke’s Shuangyue Bay project in Huizhou (specific units only).
Currently, the average selling price for the large units in this project is around 35,000 yuan per square meter, while the smaller units are priced at around 26,000 yuan per square meter. The complimentary units in Shuangyue Bay, Huizhou are approximately 40 square meters and valued at over 200,000 yuan.
According to reports by The Paper, on August 1st, Vanke in Dongguan responded that the special discounted units for the promotion were limited, and the joint sales event was already over. During the promotion, there was no mandatory bundled sales.
In recent years, the Chinese authorities have been implementing policies to boost the real estate market, but have yet to reverse the continuous decline. The recent Third Plenum of the 20th Central Committee touted “building a new development model for real estate is the key to solving its issues,” but failed to provide new approaches, especially regarding the criticized pre-sale system.
The China Index Research Institute released the “100-City Price Index Report” on August 1st this year, indicating that in July 2024, the average price of second-hand homes in one hundred Chinese cities was 14,653 yuan per square meter, marking a 0.74% month-on-month decrease, expanding by 0.01 percentage points from June. It has been the 27th consecutive month of month-on-month declines and a 6.58% year-on-year decrease.
A Chinese real estate columnist and researcher “New Talks on Real Estate” mentioned in a post on July 30 that the housing resources in China have shown signs of oversupply. With investment clients facing financial shortages eager to offload properties, it has become increasingly challenging to close transactions in the second-hand housing market, leading to a overall decrease in market transaction activities. Families owning two or more properties may encounter three main challenges in the future: heightened difficulty in selling real estate, a saturated rental market, and increasing holding costs.
Media personality from Liaoning, Song Yumu, recently stated that the mainland real estate market has been especially sluggish in recent years, facing uncertainties. Those selling second-hand houses are the most frustrated group as transactions are scarce. With a downturn in the market, there are more sellers than buyers. Those urgently looking to sell properties can only reduce prices drastically, but many are reluctant to do so!