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Chinese wait for price cuts as property slowdown accelerates

With the mainland property market softening, developers' incentives are failing to clinch sales

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New home price increases from a year earlier slowed to 15.5 per cent in Shanghai. Photo: Reuters

Sweeteners were aplenty at the Beijing Spring Real Estate Trade Fair last week. But Zhao Xiao wasn't biting.

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"Many property developers are offering small incentives but I'd rather wait a bit longer to see where prices are going," said the office worker as he checked out what was on offer at the four-day property event where developers flocked to showcase a record 600 projects.

Like Zhao, many prospective homebuyers on the mainland are staying on the sidelines, forcing developers to cut prices.

About 2,000 kilometres away in Chengdu, several hundred people gathered at Wharf's sales office to protest against a steep price cut by the Hong Kong developer in a local project. The price cut erased almost a third of the value of homes these people had bought just a few months ago, mainland media reported.

Such incidents are on the rise as the mainland property market cools down, often as a result of credit tightening, fuelling worries of the real estate bubble bursting and taking down with it the rest of the economy.

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The 70-city home price data released yesterday by the National Bureau of Statistics gave more evidence of a downturn. This came on the heels of the widely awaited economic growth data on Wednesday that showed contracting property sales and construction had dragged down gross domestic product expansion in the first quarter to its slowest pace since 2012.

Annual property inflation eased for a third straight month in March, with Shanghai leading the pack at 15.5 per cent, compared with February's 18.7 per cent. Prices in Wenzhou, where prices have been falling for 2½ years now, dropped another 4.2 per cent last month compared with March last year, yet again confirming that small cities are at a greater risk.

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