On the edge of east Beijing's Central Business District, the Tun San Li sales team stands ready to show off ornately decorated apartments to prospective buyers.
But with only one person browsing the literature in the developer's plush waiting room, it's no wonder the sales representatives look bored.
A buying frenzy for the apartments has fizzled, and sales have slowed to a crawl. More than 100 units sit unsold.
"When we first opened, we were selling everything immediately," said one young sales agent, who would give only her family name, Wang. "Now we are selling six or seven units a month. But it's really better than houses selling outside the Fifth Ring," she said, referring to an area about 10 kilometres from the city centre. "Houses there are so inconvenient, they aren't selling at all.''
In Shanghai this week, a firestorm of protest erupted when developers offered discounts of as much as 40 per cent on new unsold apartments. Several hundred buyers, who had plunked down cash for the full price, were furious that their investments had lost so much value before they even received the keys.
Increasingly common stories of slow sales and discounted property are raising fears of a deeper and, many say, overdue correction in the Chinese property market.
Chinese authorities, alarmed by soaring prices and increasing numbers of speculators, have placed limits on who can buy property and on how many homes a person can own. Bank lending has been tightened to limit developers' ability to undertake new projects and a new emphasis has been placed on the construction of low-cost housing.
The measures appear to be working: National Statistics Bureau numbers released this month showed that housing-price inflation cooled in 59 of 70 cities tracked in September, compared with a year earlier. Property prices in so-called first-tier cities, including Beijing, Shanghai, Shenzhen and Guangzhou, were flat month-over-month. Shanghai's housing authority this week showed overall property sales volume fell 13 per cent year-over-year, to a six-year low.
The country's largest developer, China Vanke, has also warned that prices have begun a downward spiral.
"We can see a trend of declining sales, especially in the major cities," executive vice-president Shirley Xiao said during a conference call with investors this week, following news that the company's property sales revenue fell 12 per cent in September. "Prices have begun to decline little by little, so we think even buyers who are able to buy will choose to wait because they're targeting even lower price cuts."
China's lofty property prices are far beyond the reach of many citizens, and have prompted widespread talk of an unsustainable bubble.
At Beijing's 800-unit Tun San Li project, which started sales in 2009 and is set to open next June, a small one-bedroom apartment runs about $400,000, and larger dwellings cost more than double that.
In comparison, a typical Chinese middle manager, teacher or government official usually earns less than $1,000 a month.
The fate of the property market is a concern for rising middle-class Chinese families. Owning a home – or two or three – is seen as the most secure way to invest savings when stock markets are notoriously volatile, and a way to help only sons secure a mate in a society where 118 boys are now born for every 100 girls.
The Shanghai protests sparked a great deal of discussion – not all of it sympathetic – on Chinese Web portals. There have been other reports of developers giving deep discounts in outlying areas of Beijing as well as Shanghai (and, in at least one case, they were pressured into giving rebates to earlier buyers).
"I heard of what happened in Shanghai. Such things have also happened in Beijing as well. The developments in real estate regulation have brought prices down severely and earned the dissatisfaction of homeowners. They have been protesting to the developers. It has been like this since August," said Zhang Dawei, an analyst with Centaline, a major Chinese real estate sales company.
Chinese Premier Wen Jiabao, who as recently as last Saturday called upon local governments to continue adhering to strict recommendations about reining in property prices, now says economic policies may be "fine-tuned." The statement has been interpreted to mean there could be relaxing of the People's Bank's tough monetary policies, which have also included interest rate hikes and increases to banks' reserve ratio requirements.
"Everyone who is buying homes now knows housing prices are in a sensitive period. And of course, owners worry," said Zhang Yue, chief analyst for Beijing real estate agency Homelink.
"But the people who are buying now still believe that future housing prices won't fall significantly, and those who are in doubt are just standing by and watching."
Special to The Globe and Mail