After months of steely resistance, Chinese property developers have finally accepted the inevitable and are cutting prices to boost falling sales.
Whether the move succeeds in putting a floor under the market will help determine the fate of the economy over the coming year.
Real estate accounts for 24% of China’s fixed-asset investment and is crucial not only for domestic steel makers but also for global producers of myriad construction inputs such as aluminum and copper.
Jonathan Anderson, a UBS economist in Hong Kong said he expects property and construction activity to stabilize and rebound in the first half of next year.
But many developers, harried by declining sales and financing constraints, are less optimistic.
Prices in major cities such as Shenzhen have plunged by up to 40%.
Average property price inflation in 70 large Chinese cities slowed to 5.3% in the year to August from 11.3% in the year to January.