Sales of new residential properties in China have fallen for eleven consecutive months. As in the UK, one of the obstacles to buying a home in China is saving up for the deposit, but property developers have found a novel way of getting around the issue to attract home buyers.
In a 16-day campaign, several property builders said they would take food as a down payment. Among the produce accepted were garlic, watermelons and peaches, which could be used to offset up to 188,888 Chinese yuan (£23,289).
Some of the exchange rates on these foodstuffs have been more than generous. One company accepted 5,000kg of watermelons, which it valued at 100,000 Chinese yuan – much more than the cost of the produce at the local market.
Such is the slump in the Chinese property market that there is a record spike in the number of Chinese home buyers who have, in protest, stopped paying their mortgage payments.
It is a typical practice in China for home buyers to pay in advance of the apartments being built. The home buyers objection was to the delays in the construction of the apartments for which they had paid advance. The resultant shock in bank stocks has further rocked the market.
Banks have called on policymakers to restore confidence in the new property market, warning that the sale of new homes from developers would at the very least be dampened, and growing constraints on the cashflow of property developers would only cause further delays and projects might grind to a halt.
Of course, anyone defaulting on their payments in protest of the building delays puts their own credit rating at risk. Home buyers can apply to terminate their purchase contract if the developer fails to build the apartment in the agreed timescale. At this point, the deposit and any mortgage payments are returned, with interest, to the home buyer.
In the UK we are not required to complete on a house sale before a building is completed, but we do sometimes face the situation where we are making payments for a home that is not delivered to a standard that can reasonably be expected. If you have cause for complaint, don’t take the risk of defaulting on the payments – talk to an independent Chartered Surveyor for help.