No one would blame all political and economical fiction writers from giving up their day job in the current climate, because, you just couldn't make it up.
Right now, Chinese homeowners are protesting in Shanghai because of falling property prices, in a sign that the government's cooling measures are finally having the desired effect. People, in what is still one of the most oppressed countries in the world, who aren't protesting about the oppression, but because of the fact that developers have cut prices in developments that they have bought in at the higher level.
Just yesterday, 200 home owners demanding refunds from leading developer Greenland Group, besieged a sales office for one of their projects.
"We require a refund because the loss we are suffering now is too great for us to afford," the Shanghai Daily quoted a protestor as saying.
He paid 17,000 yuan ($2,678) per square metre last year and claimed the developer had cut the price by around 30 percent to boost sales.
Hong Kong-listed China Overseas Land & Investment Ltd was also hit yesterday according to the Global Times, when 30 protesters stormed one of their project sales office in a repeat of another protest at the weekend.
Reporters state that the protests have already turned violent at least once, when home owners smashed a glass door at a Longfor Properties Co. Ltd. Sales office, also for a project in one of Shanghai's suburbs.
A property analyst said developers had started to cut prices in other parts of China, which could potentially lead to similar protests elsewhere.
"Property developers may be under pressure to sympathise with home buyers but if they have significant funding problems, they will opt to cut prices regardless," Su Yan of E-house China R&D Institute told AFP, adding that the claims for refunds were legally baseless. We can understand them on an emotional level, but actually the contract law does not support the demands by home owners," she said.
The Shanghai authorities have no immediate plans to intervene in the building dispute, but has ordered developers to report changes when prices are being cut by more than 20%.
The falls have been brought about because of government intervention in the market. On one hand, the bans on second home purchases, increased minimum deposits, and trial property taxes in some cities including Shanghai, has hit demand for homes. And on the other developers have suffered from a lack of funding after the government put up interest rates, and restricted lending.
Standard and Poor are predicting a 10% drop in prices across China over the next year due to the effect of the measures.
"The Chinese government is unlikely to roll back its measures to control property prices in the next six months," S&P credit analyst Bei Fu said in a research report this week.
However, at the moment, the figures don't belie a nationwide problem, with prices remaining resilient in September, with prices up compared to August in 24 out of 70 cities, stable in 29, and falling in just 17 according to government data.
- Friday 04 November 2011