As Real Estate Market Cools, Investors Are Pulling Out
Many local real estate investors are selling their properties as the overheated housing market is cooling down, with one investor reportedly earning over 2 million yuan (US$312,000) in the past four months.
The investor, identified only as Dao, bought an apartment in Qianhai for 51,000 yuan per square meter four months ago and sold it for 79,000 yuan per square meter recently, making a profit of 2.7 million yuan.
Dao said he invested the money borrowed from friends after he sensed the opportunities in March when favorable policies were introduced by the Central Government. “I usually invest in sought-after estates when the prices are lower and sell them after short-term profits are gained to pay back the money I owed,” he said.
Another investor, going by the alias Hui, made 3.45 million yuan by selling two apartments in Longhua New Area with 53,000 yuan per square meter in August after buying them at 30,000 yuan per square meter in January.
Realtors said some investors have put up their properties for sale since the end of July, with most choosing to list prices 3 to 5 percent lower than market prices in hopes of selling quickly.
Five State-owned banks in Shenzhen raised the required down payment ratio to 40 percent for first-home buyers in July, while the interest rates of mortgages were also increased. As a result, the trading volume of apartments experienced a decline and many investors started pulling out their money.
According to Centaline Property’s statistics, small-size apartments are popular with investors for their lower cost and high profit rates, with 40-percent of buyers of single-room apartments below 45 square meters were investors in June.
Wang Fei, the manager of Centaline Property’s research center, said investment in these small-sized flats dropped sharply in July, and the number of investors trading single-room apartments is expected to decrease by 7.2 percent.
Song Ding, director of the tourism and property research center of the China Development Institution, said the housing price in Shenzhen is expected to stabilize in the second half of this year with fewer investors stimulating the market.
Wang said the overheated housing market is facing an adjustment phase, adding that the bidding index of Centaline Property has declined from 77 percent to 30 percent in the past two months.