Shanghai's property sales are cooling off. Experts say the situation will last for at least a year due to cash holders' expectations towards lower prices. Our Shanghai correspondent Xiaoyu has more on the story.
At the end of another golden season for the property industry for September and October, developers are disappointed by the slower sale rise than that of last year. Predictions say there is more room for the prices to go down. The central government's macro-adjustment policies have put a lid on nearly all the demands for peculation in the real estate market. It's said to result in 6 million square meters of unsold space this year.
Now developers are offering perks like free parking spots, country club memberships, and even free cars as incentives. Banks are also loosing their ties for loans and installments, but the affect has yet to be seen..
Huang Weiwei, an analyst with Shanghai Real Estate Guide, says that the most influential aspect of the market now is the expectations of potential buyers.
"Their expectations towards future prices is the most important factor for current the property market. Currently there is almost no speculation, but there is still a small purchasing demand for single living accommodations. It is hard to say when to buy. Recently, the best sellers are those with the biggest discounts."
As in every real estate bust, buyers are waiting for prices to fall further, while sellers are unwilling to make additional cuts for fear of fueling the downward spiral.
The analyst Huang Weiwei says that it may take a year to finish this round of adjustment and that a ripple effect is very probable to come soon.
"Properties with price discounts first sold well. But as more developers are lowering prices, more buyers are waiting. As the falling prices continue to affect more and more properties, there will be a ripple effect towards the entire real estate market."
Huang also points out that in the long run, Shanghai property remains the best bet. The city of 20 million is a magnet for migrants from all over the country, and a favored destination for foreign companies establishing or expanding their China presence. Foreign institutions including Morgan Stanley have all made multimillion dollar investments in residential property in Shanghai.
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Producer: Han Wei 
