Angry Chinese Homeowners Vent Frustrations After Price Cuts; Homeowners Demand Their Money Back After Developer Cuts Prices on New Homes

Angry Chinese Homeowners Vent Frustrations After Price Cuts

Homeowners Demand Their Money Back After Developer Cuts Prices on New Homes

ESTHER FUNG

March 22, 2014 9:11 a.m. ET

CHANGZHOU, China—Groups of angry homeowners put up banners and demanded their money back after Hong Kong-listed property developer Wharf Ltd. cut prices on new homes in an eastern Chinese city, in the latest sign of stress in the nation’s property market.

Around 20 homeowners picketed outside a property showroom in Changzhou Saturday, demanding to meet executives of the developer. They said they wanted their money back after prices at the project, called Phoenix Lake Garden, were cut by as much as 16%, according to the protesters.

Meanwhile, there was also a small disturbance at a second project called Ambassador House in the same city after the same developer cut prices there. According to property agency Soufun Holdings, SFUN -7.46% Wharf cut prices of 20 apartments in the project to 8,200 yuan ($1,317) per square meter, down from the average 11,000 yuan per square meter it recorded in recent months.

“Wharf, give us justice. Return us our hard earned money,” read one of the banners, held up on bamboo poles outside the Phoenix Lake Garden showroom of a project for mid- to high-end apartments and villas.

“We aren’t speculators. We just want an explanation from the developer,” said one 35-year-old home buyer, who said he had bought an apartment and gave his surname as Wu. “This is very unfair.”

Others said that as many as 100 people who had bought homes at the project had vented their frustrations outside the showroom over the past week.

Asked about the incidents, Wharf officials in Beijing didn’t comment directly on the disturbances.

“China’s housing market has already become very market-based, price adjustment according to market changes is a normal market behavior,” Wharf said in a statement to The Wall Street Journal. The price adjustment at Phoenix Lake Garden is focused on selling off inventory, Wharf added.

After a four-year campaign by the government to cool spiraling property prices, rises in home prices are starting to slow and in some smaller cities they are weakening.

Growth in average housing prices in 70 Chinese cities moderated in February for the second-straight month though they were still nearly 9% higher compared with a year ago.

But weaker economic growth, slower home sales and rising volumes of unsold houses have convinced developers in a number of cities to cut prices to raise cash quickly.

The drop in newer home prices hasn’t gone down well.

Furniture at the showroom of Wharf’s Ambassador House was knocked over and the wooden stands for advertisements for the homes were flung on top of a model of the project.

Outside the Phoenix Lake Garden showroom, Mr. Wu said he bought a 120-square-meter apartment in December, for 730,000 yuan. Prices are now 610,000 yuan for a similar apartment in the same tower, he said. “If prices are now cut, does it mean the property developer would cut corners?” he added.

Mr. Wu said he found out about the price cuts from text messages on March 14 from the sales team announcing them and asking if he wanted to buy another apartment. “I’ve been here every day since March 15, and no representative from the developer has spoken to us yet,” he said.

Wharf isn’t the first developer in recent weeks to cut prices in Changzhou, a third-tier city located halfway between Shanghai and Nanjing. Guangzhou- based Agile Property cut prices of its luxury apartments in Agile-Star River project earlier this month. Agile said at that time it was a temporary sales promotion.

Property developers say privately there isn’t enough transparency in land sales and land use, which sometimes give rise to overbuilding in many smaller cities.