Follow us on TWITTER: http://twitter.com/cnforbiddennews Like us on FACEBOOK: http://www.facebook.com/chinaforbiddennews Due to changes in legislation, the real estate market in Beijing and Shenzhen has recently experienced a tidal wave of agency closures. The trend began with small to mid-size agencies then spread to larger realties, indicating that the 'winter' of China's real estate market is approaching. Analysts say that the recent wave of price cuts and agency closures implies that a real estate market bubble is about to burst. Analysts say the root cause of these problems lies in China's warped real estate policies. Those in the know were able to predict the boom and bust cycle of China's real estate market. With the recent passage of legislation, limits are expected to be placed on home purchases in past February, As a result, China's larger realties will experience a big hit. In Shenzhen, the monthly turnover of existing homes came in at only 2,000, down 80% on a year-on-year basis. Centaline Group, a leading property agency, had to shut down many of its branch offices due to the dramatic drop in business. On November 7, Li Yaozhi, general manager of the Centaline Group in the southeast district of China, revealed to Shanghai-based Oriental Morning Post, that 60 agencies will be temporarily closed this year, with each realty losing over RMB 100,000 [US$15,755], per month, in revenue. Prior to the Centaline Group announcement, several local large realties in Shenzhen had closed their doors. According to Caixin.cn reports, in October, Shenzhen Shihua Investment Consultant shut down nearly 100 local agencies. Zhonglian Real Estate shut down 30-60 agencies. HKP Property Agency also closed some agencies in September. In 2008, the agency-closing tidal wave had already begun in Shenzhen, when the global financial crisis first began. Many real estate agencies are afraid that the current agency-closing tidal wave will be worse than the previous one. Beijing's real estate agencies are facing the same fate. A large real estate agency director told Beijing News that in the first three quarters of this year, the entire industry has recorded a loss. At first, 50 small agencies began shutting their doors, followed by larger real estate companies. He believes, conservatively speaking, that 3,000 agencies in the industry are expected to close their doors this year, with some 50,000 brokers being laid off. Free-lancer writer, Zhu Xinxin, explained that since the Chinese Communist Party (CCP) pumped in excessive capital into the real estate industry, many large realties sprang up. Now, with officials suppressing the real estate market, it is not surprising that we're seeing a lot of agency closures. Zhu Xinxin, a free-lance writer: "At the beginning, these contractors developed their business relay on those real estate companies. Thus, over the years, the entire industry has become warped. Real estate development has become a pillar industry, but an 'economy' like this is abnormal. Instead of trying to meet the public's need for housing, real estate has became a very speculative industry, warping into the next real estate bubble. So in essence, the fact that intermediaries are closing down is the result of abnormal developments during the previous years." At present, China's real estate market is experiencing a tidal wave of price cuts, sales slumps, and intermediaries closures. Does it mean that China's real estate industry has reached a turning point and is about to collapse? According to Wu Fan, editor-in-chief of China Affairs, this September, in 70 major cities across China, 46 cities real estate prices stopped rising and in some cities, prices have already begun to fall. In contrast, this January, ten cities quadrupled the price of housing within eight months. Wu Fan, editor-in-chief of China Affairs: "China's real estate bubble began to burst at last. Arriving at this point, various things have begun to happen and will continue to happen, especially social unrest. Because when a bubble bursts, it is part of a larger process. And this process will inevitably cause people great pain along with severe social and economic changes. When Chinese people can no longer accept such changes, they will stand up and fight against the CCP." Recently, Chen Jian, an adjunct professor in finance and real estate at Johns Hopkins University, said to China's First Financial Daily that he believed the turning point of China's housing market has arrived, and the real estate bubble has begun to burst. Chen Jian pointed out that the scariest thing is that the CCP authorities are not prepared at all, thus turning a small crisis into a huge crisis. NTD reporters Chen Han, Li Jing and Xiao Yu 《神韵》2011世界巡演新亮点 http://www.ShenYunPerformingArts.org/

• published: 09 Nov 2011
• views: 2388