China: Desperate and Reckless marketing, exchanging garlic and wheat for a house

China’s housing market is gloomy, many cities have announced easing restrictions on sales and prices to encourage people to buy houses. The “wheat for a house” marketing is going viral on Chinese social platforms/media.

Reuters cited images of two posters in an article titled: “Reckless Chinese property/real estate developer willing to ‘trade wheat for a house.'”

According to Sina Finance, one poster shows that Jianye Riverside House has recently launched a home-buying activity “trade wheat for a house.” One of Jianye’s people told reporters that the two posters above are real and are actually marketing activities for their projects.

A poster of a “wheat for a house” markets a Western-style house along the Jianye River in Cangqiu City, Henan Province, which has gone viral on the Internet. The content “about 14 cents/lb, wheat for houses,” and the other poster markets a house in Qi town, Kaifeng city, Henan province, “34 cents/lb, garlic for houses.”

According to Bloomberg, real estate company Central China Real Estate—China’s 37th largest real estate developer, proposes to pay wheat farmers a maximum of up to $23,900 to offset the prepayment for houses in the River Mansion apartment project in Shangqiu, (a city in Henan province, China). Earlier, an advertisement by Central China Real Estate made headlines on social media with the headline “trade wheat for a house.”

According Reuters, the scheme allows buyers to use wheat (for about 30 cents per catty) to pay an upfront payment of $23,900 for a company project. In China, one catty is just over 1 pound.

According to a report by Times Finance on June 21, a media reporter posing as a consumer approached Li Ping (pseudonym), a salesman at Jianye Riverside. Li Ping said the wheat exchange operation period is from June 20 to July 10. During this period, home buyers can sell wheat to designated buyers at above-market prices for the maximum prepayment of $23,900.

Garlic-for-home ads also appeared on various social platforms in China at the end of May. Reports indicate that the purchase price of wheat and garlic in the advertisement was actually higher than the market price. The wholesale market for both garlic and wheat is 22 cents/lb.

This event attracted attention from the outside and also increased sales effectiveness. For example, the report mentions that from May 22 to June 6, real estate in Ji District, Kaifeng City, Henan Province received 2,859 inquiries, 852 groups of visits, and 30 trades with up to 860,000 pounds of garlic in 16 days. 

Sohu quoted some netizens saying:

  • “Garlic has become a currency,”
  • “Although the price is pushed up, it is a good thing that people actually increase the price of garlic.”
  • “I hope radishes and cabbages can also be exchanged for houses in the winter.”

Weibo 找房豹 (zhaofangbao) on June 22 posted an article titled: “Exchange garlic for a house. Connoisseur marketing of real estate companies, it takes a lot of work to sell houses.”

This account also quotes the words of some sales staff and netizens:

“The salesperson said that because garlic is a seasonal product, it must be stored in July, otherwise it will germinate.”

According to the report, these two real estate properties are pre-sale houses. The Jianye River house is located at the intersection of Dangui Road and east of Qiushui Road in Minquan County, Shangqiu, Henan Province. They are expected to be delivered on June 30, 2024. Their unit price ranges from $750 to $900 with areas from 1269 sq. ft. to 1550 sq. ft.

Cities are focused on “real, buy-to-live homes this year,” with a variety of unit types, including three-bedroom apartments from 1100 to 1500 sq. ft. four-bedroom units from 1540 sq. ft. to almost 2000 sq. ft., and houses over 2150 sq. ft., unit prices range from $7,000 to $8,350.

However, Aboluowang said, a real estate salesman admitted that many houses under construction had to close one after another because of the epidemic, people were both worried about buying “unfinished” houses and worried about the new housing market. 

To promote housing purchases, many regions in China have taken special measures. For example, Shangqiu city, Henan province has announced incentive programs such as cutting deposits and interest rates and giving subsidies to potential customers. As a result, if people buy ordinary housing for the first time, they can get a subsidy of almost $1,500, and the maximum subsidy for potential customers is about $7,500.

On the part of Kaifeng city, Henan province, the “0 pressure and 0 risk” measure has also been implemented, which is, to live in an existing house and then pay the money, this advertisement emphasizes that buyers can deposit the amount of $7,500 first, then finalize when the house is handed over. 

Zhengzhou City, Henan Province took the lead in policy easing, and Harbin, Dongguan, Beihai, Tangshan and other regions also introduced various measures to loosen the housing market, encourage home loans, and lower payment thresholds.

According to the report, China’s housing market recovered slightly in the first half of June due to various price drops. Data from Zhongda Securities Research Report indicates that, from the beginning of June to June 17, compared with the previous period, the housing market of first, second, and third-tier cities increased by 122%, 44% and 31% respectively. In addition, compared with the previous month, the rate of new house purchases in 42 major cities is 49% higher. However, the industry believes that this data must be maintained, which means that the housing market is thriving.

When China’s real estate bull market ends, developers will face more than $5 trillion in debts.

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