Incentives Up to $325K in China's Housing Market; Shopping on Taobao, China's "eBay-Like" Portal

Developers in China are offering up to $325,000 in incentives to home buyers.

The catch? Incentives come in the form of a credit on Alibaba’s Taobao, an e-commerce platform similar to eBay. More modest discounts, some of them retroactive, are offered by other developers to combat sinking purchase volumes.

Sinking Sales Volumes , Prices

Sales are down 9.4% as measured by floor space compared to the same 7-month period last year. Prices are down in 55 of 70 cities in June vs. May, and in 35 of 70 cities in May vs. April.

Hefty Discounts

Please consider Developers Offer Hefty Discounts in Strained China Homes Market.

In the latest sign of Chinese developers’ desperation to unload inventory into a weak property market, China Vanke Co is offering discounts of up to $325,000 to homebuyers who shop on Alibaba’s Taobao, an e-commerce platform.

The country’s biggest developer will give discounts that match shoppers’ spending of up to Rmb2m ($325,000) on the eBay-like service. Homes in real estate developments in Beijing, Shanghai, Guangzhou and Chongqing, among other cities, will qualify, according to an advertisement on Taobao’s website.

While few would-be homebuyers could afford to spend millions of renminbi on Taobao in a single year, Vanke is offering a more modest discount of Rmb50,000 to those who have spent smaller sums on Taobao over the past year.

Gemdale Corp, the sixth-largest [property developer], reported a 50 per cent decline in net profit, even as operating revenue rose 3 per cent, after falling prices hit profit margins. Profit at China Merchants Property, the eighth-largest, declined 30 per cent on flat revenues.

The inventory build-up may get worse before it gets better. Several developers noted in their recent half-year reports that September and November will be a peak period for new housing completions. That will add to the supply overhang and increase pressure on developers to cut prices.

Inside Alibaba’s Taobao

The Financial Times reported "discounts of up to $325,000" but the discounts seem more like unrelated incentives than home price discounts.

Inquiring minds may be interested in a look at an English version of Alibaba’s Taobao to see how one might spend $325,000 (2,000,000 Rmb).

Here are a few examples



Let's put 50,000 Rmb discounts into perspective. Converted to dollars, it's a mere $8,127. That's not much of an incentive to buy a house. 

With a flood of inventory coming up, and prices falling already, discounts have only just begun.

Price inflation? Apparently not on Taobao. Unfortunately, I cannot get the site to work well. Clicking on any of the following links ...



... returns this exact message "this category can't be show,please goto taobao and find item you need.then come back to our site and use quick order to buy items you want."

User friendly? Not at all, at least for English-speaking shoppers.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com