By KEITH BRADSHER
SANYA, China — China’s nationwide real estate boom became so manic last year that many would-be buyers camped in tents on the sidewalks of this tropical island city to be at the front of the line when condominiums went on sale — even though the condos had not yet been built.
But the real estate market here has cooled so rapidly this autumn that the tents have disappeared and been replaced with 20-foot-long banners on balconies with the phone numbers of speculators desperate to sell. Ads have grown on the Internet for unfinished apartments at up to 28 percent off the price at which developers were selling them a few months ago.
“Last year, when things were good, we had over 100 people a day coming into our office,” said David Zhang, the sales director at the Honor-Link Investment Consultant Company, a real estate brokerage here. “Now we have three or four a day, and no one is buying.”
One of the world’s few remaining real estate bubbles finally seems to be losing air. Real estate transactions have slowed so quickly that in the last two weeks, brokerages across China have laid off thousands of brokers and closed hundreds of offices.
News media have reported on at least five street demonstrations in Shanghai since Oct. 22 as early buyers in condo projects have protested discounts offered to later buyers, even breaking into sales offices and smashing models of the buildings and apartments.
A 32-year-old protester said that he and his wife had paid $173,000 last January for an 850-square-foot apartment in a building on the outskirts of Shanghai. But the developer later cut the price for the remaining units of this size in the building to $124,000, wrecking the resale value of the condo.
To add insult to injury, the building is not scheduled to be completed until May.
The couple’s mortgage is roughly equal to the new value set by the developer for the apartment, meaning that they have lost all of their equity. And the couple is paying $630 a month in mortgage interest out of a combined monthly paycheck of $1,100.
“The government should pay attention to people like us and give aid to us, such as cutting interest rates,” said the protester in an interview. He gave only his surname, Sheng, because he said some of those involved had received threatening phone calls urging them to stop protesting.
The Chinese government is deliberately bringing down real estate prices to improve the affordability of housing and prevent the housing bubble from becoming worse. Premier Wen Jiabao said Sunday that the government had no intention of changing course.
“We would like to stress that there is no possibility of loosening the real estate policies — our target is to let the property price fall to a reasonable level,” he said.
The government has pushed up interest rates and set limits on bank lending, deliberately engineering a credit crunch with the goal of slowing inflation as well as making it harder for speculators to borrow money. The government has also limited the number of mortgages for each individual borrower, raised the down payments for mortgages to as much as 40 percent to protect the banking system from losses and begun experimenting with the introduction of real estate taxes in cities like Chongqing.
Local and provincial governments have taken further measures. The provincial government here on Hainan Island has chilled sales to buyers from other provinces since last spring by requiring that they prove that they either paid income taxes last year or paid into China’s version of Social Security; evasion of these taxes is widespread.
One clear sign of weakening in the property market comes from the China Real Estate Index System, a weekly survey done by the private SouFun Group in Beijing. It has found that the number of deals fell by more than 50 percent in six of the 35 cities surveyed in the first week of November, compared with the same week last year; over all, the number of transactions fell in 28 of the cities.
A variety of government and other private indexes show fairly little change in the prices reported for the dwindling number of transactions still taking place. But real estate price data is notoriously difficult to collect reliably in China, and brokers in some of its largest cities say that steep declines are already taking place.
The Geland Real Estate Company in Beijing has closed one-fifth of its nearly 250 offices this year. “Business is not good,” said Yan Bingie, the company’s marketing director. “I do not see any quick recovery in sight.”
Centaline Property Agency, a large Asian brokerage headquartered in Hong Kong, has temporarily closed 60 of its 385 offices in Shenzhen, a metropolis of 13 million people, and laid off 1,000 of its 8,000 employees there.
“For primary sales of new units, the property developers have indeed reduced their asking price by 15 to 20 percent,” said Andy Lee, the company’s director of Shenzhen operations. “These are real cuts,” he said, from prices that buyers would pay until very recently. “In the secondary market, we see homeowners only willing to reduce asking prices by 10 to 15 percent.”
The real estate market tends to be volatile here in Sanya because this city of 500,000 is a center of the emerging vacation home industry. Prices rose through the 1990s until the Asian financial crisis in 1997 and 1998, fell up to 80 percent until 2004, and then soared more than tenfold to a peak last summer of more than $300 a square foot.
Economists at Barclays Capital suggested in a research note on Tuesday that the Chinese government might start reversing recent policies if the fall in real estate prices reaches 20 percent. The drop could reach 30 percent because the market might initially maintain its downward momentum, they said, but they suggested that an overall drop of 10 percent seemed more likely.
The mystery now lies in how much effect the real estate slowdown will have on the broader economy. Down payments of 20 percent to 40 percent for mortgages seem high by American standards but are feasible here because of high Chinese savings rates. That may mean that banks are less likely to sustain the heavy losses on home mortgages that Western banks have had over the last few years, senior financiers and real estate developers said, although they said that some smaller banks have substantial exposure to developers.
But the real estate downturn has only just begun, Mr. Zhang said, adding, “We are on the cusp of winter, and we don’t know who will survive it and who will not.”