Controversial Chinese Real Estate Ad: ‘Buy a House, Get a Wife and Gold Bar for Free’
Eugene Park Views
Chinese Real Estate Developers Desperate Amid Economic Downturn
Resorting to Absurd Marketing Strategies to Recoup Investments
Home Prices in Beijing, Shanghai, Guangzhou, and Shenzhen dropped over 10%
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“Buy a house and get a wife for free.”
This is a phrase from an advertisement video presented by a real estate development company in Tianjin, China, in September last year. Although it means getting married if you have a house is much easier, it sparked a massive controversy as it was expressed as a way of offering a gift to home buyers. Eventually, the company was fined $4,184 due to the advertisement.
Another real estate development company in eastern Zhejiang province in China has promised to provide gold bars when buying a house. The absurd marketing strategies of Chinese real estate development companies reveal the severity of the crisis in the Chinese real estate market.
As China’s real estate market slump continues, houses are no longer recognized as safe assets. The Wall Street Journal (WSJ) recently cited data from the National Bureau of Statistics of China and reported that new home sales in China last year decreased by 6% compared to the previous year. Due to the cooling of the housing market, the housing prices in the four major cities of Beijing, Shanghai, Guangzhou, and Shenzhen last month fell by 11-14% compared to the previous year.
Chinese real estate development companies, which are in financial difficulties because houses are not selling, are facing a crisis of large-scale layoffs, bankruptcy of subcontractors, and default problems on overseas bonds. The problem is that the real estate market is not expected to improve for at least two more years.
Earlier this month, the former head of the People’s Bank of China statistics department predicted that “new home sales this year and next year could decrease by more than 5% than now.” Raymond Yeung, a China economist at Australia and New Zealand Banking Group (ANZ), also analyzed that “Chinese people no longer see houses as safe investment products, so there will be less demand for purchases in the future.”
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House prices have halved in prime school districts in Beijing and Shanghai. According to China Business News, the price of Fengyao Ziyuan in the Wanliu area of Haidian District in Beijing has plummeted by 100,000 yuan per square meter compared to its peak. This area is a school district where you can enter the third elementary school in Zhongguancun, one of Beijing’s top three elementary schools. It is a popular area among the middle class in Beijing. The price of a house in this area, which was quoted at 224,000yuan per square meter with a total of 9.85 million yuan in 2021 (about 44 square meters in size), has fallen to 6.17 million yuan (52 square meters in size for Studio) at the end of last year and is being traded at 119,000 yuan per square meter.
Liu Yuan, the head of real estate research at the Chinese real estate brokerage Centaline, said, “If there were no government measures to boost the real estate market, the price of new homes would have been 50% lower than now,” and, “A turning point will come when people feel that buying a house is cheaper than renting one.”
As the real estate market slump continues, the finances of local governments in China, which had relied on land sales fees as a major source of income, are also shaking. WSJ reported that local governments in China are estimated to have a debt of $400 billion to $800 billion. Chinese authorities have also prepared a fund lending program to prevent potential local government bankruptcies.
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