Photo credit: René Hofmann
A developer in China is offering a BMW with every apartment purchased.
The free car is the latest in a long line of measures in the country's turbulent property market, as developers are desperate to stimulate sales without cutting prices.
A reduction in prices has already been ordered by the government, which is tightening its belt in an effort to cap rising inflation rates and cool China's housing bubble. But while prices in the Central Mansions project, located in Wenzhou, fell by 1.4 per cent in September month on month, the developer would now rather give away a BMW than slash its apartment price tags further.
"Whoever signs a contract and makes the downpayment will be able to drive away in a BMW," a sales assistant at Central Mansions told CNBC . "No, it doesn’t mean that sales are bad. It’s just that we’re trying to attract customers," they added.
According to OPP , the cars on offer are approximately equal to a 10 per cent discount on the property. Other companies' incentives for buyers range from plots of land to holiday cruises – and even Lous Vuitton handbags.
These free gifts follow repeated protests against developers by existing property owners, angry at the reduced value of their homes. Indeed, contrary to the Central Mansions statement, the market is full of negative sentiment as the number of property sales in China continues to drop.
Transactions fell by 25 per cent from September to October, according to the statistics bureau, while the total value of transactions plummeted from 493.9 billion yuan in September to 372.3 billion yuan in October. Home ownership is down too, with just 10,743 houses sold in Beijing in the two months combined.
The Chinese government has already introduced limits on property purchases this year, in addition to increasing down-payments, raising property taxes and upping mortgage rates across the country. As a result, housing demand is down in addition to prices.
The government remains determined to control the market until property prices reach "reasonable levels", but real estate companies now fear a market crash instead of a gradual cooling; last month, over 177 property agencies closed in Beijing .
China isn't the only country trying to stimulate its housing industry. Cyprus has reduced property transfer fees this month , while Spain has halved VAT on homes until the end of the year. But even in Spain, where prices are reaching new lows and attracting overseas interest, developers are not offering free cars to buyers.
With land auctions recently cancelled and price cuts expected to continue, China's market is flooded with an over-supply of unwanted property. At present, the total number of unsold houses in the capital is over 120,000 – the highest figure in 29 months. That's a lot of free BMWs.
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