High Prices Dampen Beijing Homebuyers

Many real estate companies in the capital Beijing have started giving discounts to home buyers to try to boost home sales. But many prospective home buyers are still not buying.



Although it's the weekend, there are only a couple of prospective home buyers looking at the miniatures of apartment buildings at a Beijing-based real estate company. The salespeople there say they sold more than 40 apartments every month in the past, but now they sell less than 10 a month.



Real estate agencies in the capital have seen a decline in housing sales since the end of last year. They say sales dropped by 50 percent in the worst month.



That is why some have started offering a five percent discount to homebuyers. Others are offering to pay for the one-year property management fee.



But these incentives are failing to arouse the enthusiasm of home buyers because housing prices remain high.



One of them has this to say.



"I think that housing prices are really so high that ordinary people cannot afford them. I am convinced they will gradually decline."



Li Wenjie is the general manager of Beijing Zhongyuan Real Estate Company. He explains why homes sales are continuing to decline while prices remain high.



"One reason is that after the government's macro-control policy, the sales volume declines, and consumers begin to wait for a price decline. The other reason is that demand exceeds supply. The supply in 2007 was 30 percent lower than in 2006."



To curb the housing price hike and speculation, the central government is taking a series of measures, including stricter control over land supply and introducing new taxation policies.



The Beijing municipal government has also announced that it plans to build more houses this year. Real estate experts say they expect these moves to change the current situation.