Behind Changzhou's Market Rescue: Prices Never Go Up, Developers Flee

Earlier this week I posted on the Changzhou "market rescue" effort: Changzhou Party Mouthpiece: Now Is A Great Time to Buy Changzhou Real Estate; People's Daily: Where Is Your Integrity?

Behind the desperate marketing ploy is a very weak housing market.

In the past few years, due to oversupply of land, insufficient influx of new residents and a slowing economy, prices have been stagnant. A developer previously asked, "Why don't Changzhou prices ever go up?" Now he is asking, "How do I cut prices?" Two months ago he tried cutting prices 5% to 10%, but found cutting prices didn't work anymore. Some developers have been using a stable pricing policy to drive sales and that could have kept a lid on prices before.

The amount of land being developed in Changzhou has tumbled 70% from 2010 levels. Developers are getting out while they still can. Agile Properties slashed prices 40% off its planned price in order to unload inventory.

The aforementioned developer said that only about one-third of residents in the city have real purchasing power and based on the new construction, there is about 60 sqm per person, a scary number. A midsize developer said Changzhou is a market he definitely will not enter. There is the provincial (Jiangsu) capital of Nanjing to the west and the more developed Suzhou and Wuxi to the east, which attracts people away from Changzhou, plus Suzhou has a strong economy.

常州“救市”背后：房价总是涨不上去 大型开发商逃离