Wenzhou Housing Suffers Crushing Price Drop
Once China’s most popular hub for real estate investment, the coastal city of Wenzhou has seen a significant drop in housing prices in recent months.
In the third quarter, house prices in Wenzhou dropped 18.03 percent compared with the same period last year, according to real estate price monitoring data published by the Ministry of Land and Resources. The price of some properties fell from between 50,000 and 60,000 yuan per square meter ($737 – $885 per square foot) to 30,000 yuan per square meter ($442 per square foot), making Wenzhou the city with the largest real estate price drop in China.
In 2009, the average price of new apartments in Wenzhou reached 26,703 yuan per square meter ($394 per square foot—nearly the average price of residential properties within Shanghai’s inner ring—causing Wenzhou to lead the nation in home price appreciation, according to China Business News.
However, Wenzhou is now leading the fall in real estate prices. In September 2012 alone, the price for new residential buildings in Wenzhou dropped 16.4 percent compared with the same period last year. Compared with peak prices in 2009 and 2010, real estate prices dropped 30 to 40 percent.
Wenzhou’s Xiangti Peninsula Complex, which opened for sale in 2009, is considered a prime example of the city’s rapid real estate growth, according to Yangcheng Evening News. In 2010, inflated demand drove up the price of peninsula properties to 60,000 yuan per square meter ($885 per square foot). Two years later, Xiangti Peninsula’s prices have been halved at only 30,000 yuan ($442 per square foot).
Statistics from Wenzhou’s Small Business Association show that between 2008 and 2010, 60 percent of private loans went into the real estate market, significantly increasing the risk of property values crashing. In 2011, new purchase quota policies, loan limits, and property taxes, along with the private loan crisis, caused Wenzhou’s real estate prices to quickly drop, and sales to rapidly diminish.
Several reporters from China Times visited many real estate projects in Wenzhou in mid-November and found that property prices had been cut to half. Now, land prices in Wenzhou have also dropped almost 50 percent, with buyers few and far between.
Read the original Chinese article.
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