Oct. 24 (Bloomberg) -- Hundreds of Shanghai homeowners gathered outside sales offices of China Overseas Property Group Co. over the weekend protesting price cuts by the developer after their purchases, Shanghai Daily reported today.
The buyers were demanding refunds or cancellations for their purchase contracts after the property company lowered prices for its project in Pudong district, the newspaper said. The prices were reduced to about 16,000 yuan ($2,510) per square meter (10.76 square foot) from 22,000 yuan, according to the newspaper. The developer is a unit of Hong Kong-listed China Overseas Land & Investment Ltd., which is controlled by nation’s construction ministry.
“We are communicating with the relative government departments over the activities by the homeowners over the weekend,” said Tang Minzhi, a Hong Kong-based spokeswoman at China Overseas Land, declining to elaborate. She said she doesn’t have details of any cuts because the prices fluctuate daily and are tracked every quarter.
The protest, which wasn’t seen at its Pudong office today, came less than a week after the nation’s home prices gained in fewer than half of the 70 cities monitored by the government in September for a second month as sales eased following harsher policies. New home prices in the most affluent cities, including Shanghai and Beijing, were among 30 that were unchanged from August, the statistics bureau said, while 16 cities posted month-on-month declines.
Chinese developers’ credit outlook will be “increasingly severe” amid government efforts to curb rising home prices, Standard & Poor’s said in a report on Sept. 27. The government increased down-payment requirements and mortgage rates on some homes this year and issued home purchase restrictions in about 40 cities.
“Developers are facing a cold winter and most of them are under cash pressure as the government tightens lending,” Zhao Duo, a real estate analyst at Sealand Securities Co. in Shenzhen, said by phone. “To attract buyers and boost sales, they must lower home prices further.”
China’s Premier Wen Jiabao said over the weekend that the control of the property market is at a “critical” period and the nation must continue efforts to control food and housing prices to ease soaring inflation and maintain economic development and social stability.
Longfor Properties Co. said last week it priced its Shanghai luxury villa project “Affecting Yard” at a similar level as neighboring developments, responding to a Shanghai Securities News report about its reduction. Longfor said it usually prices their projects above the market rate.
China’s central bank has raised its benchmark lending rate three times this year and lifted lenders’ reserve requirements six times.
--Jiang Jianguo. With assistance from Winnie Zhu in Shanghai. Editors: Linus Chua, Andreea Papuc
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