Dramatic appreciation for buying property in China? In recent years, with the economic slowdown and plummeting property prices in China, the market has been stagnant, and most buyers have had to endure the pain of depreciating property values. A few years ago, to boost sales and circumvent government restrictions on random price cuts, some developers resorted to enticing buyers by giving away gold as an incentive.
For a property in the distant suburbs of Hangzhou purchased in 2023, the unit's book value has depreciated by over one million yuan. However, as the gold gifted by the developer has dramatically increased in price, the gain from gold has offset the property’s loss, resulting in a net asset increase for the homeowner.
According to the “Urban Express” report, at that time, gold was priced at about 450 yuan (255.31 ringgit) per gram. Purchasing a 119 square meter unit for a total price of around 2.5 million yuan (1.4184 million ringgit) entitled the buyer to one kilogram of gold worth about 450,000 yuan (25,530 ringgit), which effectively brought the price of the property down to about a 18% discount.
But two and a half years later, the script has taken an astonishing twist. In the Lin’an District, property prices have experienced a substantial drop over two years. In the area where Huafa Hui Tianfu is located, the price per square meter has dropped from about 22,000 yuan (12,500 ringgit) in 2023 to the current listing price of about 14,700 yuan (8,340 ringgit).
Gold appreciates 1.5 times in less than 3 years
Meanwhile, as of February 9th this year, the international gold price has risen from about 450 yuan per gram in 2023 to about 1,120 yuan per gram (635.44 ringgit), an increase of nearly 149%.
Homebuyers who received gold when purchasing their units witnessed the value of their gifted gold soar. For example, with a 119-square-meter unit that came with 1 kilogram of gold, its value surged from about 450,000 yuan at the time to roughly 1.12 million yuan (63,540 ringgit) today.
Calculating it, the 2.5 million yuan unit purchased back then has depreciated by 870,000 yuan (49,360 ringgit), but the 1 kilogram of gold gifted has appreciated to 1.12 million yuan. Offsetting the two, even though the property value has decreased, the explosive gold price rise means the homeowner's assets have actually increased by around 250,000 yuan (14,180 ringgit). However, this calculation assumes the homeowner has held onto the original 1 kilogram of gold the entire time.