In a sign of growing public concern over fluctuations in the country’s housing market, homeowners in two Chinese cities gathered over the weekend to demonstrate against plans by property developers to make steep price cuts even as the industry has recently struggled to attract buyers.
According to the report, a crowd of homeowners surrounded the Shanghai sales office of property developer Greentown China Holdings Limited to protest a 25% drop in home values owned by the company.
However, in Jinan, capital of Shandong Province, owners unfurled banners to protest a similar cut and clashed with counter-protesters organized by the real-estate company.
China's economy, the world’s second largest behind the United States, is highly dependent on its real estate sector, which accounts for between 16% and 20% of China's gross domestic product growth. Because of strict capital controls and a volatile stock market, Chinese citizens invest a significant portion of their surplus income into real estate: Despite widespread rural poverty, China’s homeownership rate is 90%.
Nevertheless, local governments lend money to property developers, whose investment in steel, cement and other commodities fuels politically desirable GDP growth.
As a result, rows of apartment buildings often lacking residents dot the landscape in China’s major cities, creating widespread concerns of a bubble.
(Source - www.steelguru.com)