Property agents struggle in Chengdu

Date:2011-11-21wangxin  Text Size:

Affected by house purchasing limits and loan restrictions, China’s property market has felt the bitter winter chill earlier than usual this year.

The sluggish market has pushed many real estate agencies - those that make a living by selling second-hand houses - to the brink of bankruptcy. In south-west China’s Chengdu, many dealers have left the business altogether, while those that remain are exploring new ways to survive.

Wang Guiqian has been a real estate agent for over three years. Second-hand apartments in the residential area he usually deals within, are priced at an average of 9,000 yuan per square meter. Sales have been red-hot until this year, after the government’s control policies were introduced. As business slides, Wang’s income has shrunk.

Wang Guiqian , real estate agent in Chengdu, said "I haven’t sold a single apartment in the past two months, I’ve only had a few rental deals. In 2009 and 2010, I could make more than 10,000 yuan a month. Since the government control policies were introduced, I can only making 3,000 yuan now. When housing prices go down, owners would rather lease than sell. Many potential clients are being held back by the purchase limits. There are even less clients buying for investment purposes now."

Apart from the purchase limits, banks have tightened their grip on mortgages. Dealers say some potential homebuyers were forced to give up, because the loan application process has become too complicated and time-consuming.Many real estate agents in Chengdu say their business flow has been halved, and their incomes have declined by 70 to 80 percent. Some smaller agencies are being forced out of business altogether. Others are trying to put up a fight, by looking for new business opportunities.

Mei Jun, real estate agent in Chengdu, said "If we keep dealing in second hand houses, we might be able to survive, but not make profits. So we thought about dealing some new complexes. Now new housing complexes account for sixty percent of our total business."

Real estate agents say the price decline of new houses is bigger than second hand ones, and thus more lucrative to consumers. Also, real estate developers are finding great value in hiring housing agencies because they have a more mature consumer database.

Zhong Chunmei, Midland Realty Property MGMT.CO. said "Usually, developers sell houses on their own. Now they see that almost half of their sales volume are brought in by us. They can no longer neglect us. Currently in Chengdu, there are over 30-thousand certified housing agents."

Insiders say this cooperation is a win-win deal. Housing agents are entitled to a two percent commission fee from developers, which helps pull them out of the weary second-hand housing market. On the other hand, developers can tap into the consumer pool of housing agencies and make sales more efficient.

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