A property in a suburban area of Hangzhou, purchased two years ago, has seen its market value drop significantly by nearly a million yuan. However, a dramatic "hedging" effect occurred due to a surge in the price of gold that was given away by the developer at the time of purchase.
In June 2023, the Huafa Huitianfu project in Lin'an District, Hangzhou, launched a promotional campaign featuring the unusual tactic of "buy a property, get gold." The promotion offered direct gold rebates based on the original property price. For the fourth batch of units (excluding buildings 4, 6, 7, and 14), a 89-square-meter unit came with a 700-gram gold rebate; a 100-square-meter unit with 850 grams; and a 119-square-meter unit with 1000 grams. For the fifth batch of units (buildings 4, 6, 7, and 14), a 89-square-meter unit included a 900-gram rebate, and a 100-square-meter unit came with 1050 grams, according to a former employee involved in the project's planning.
Calculated at the prevailing gold price of approximately 450 yuan per gram at that time, purchasing a 119-square-meter apartment priced around 2.5 million yuan would yield about 45万元 worth of gold (1000 grams), effectively an 18% discount on the property price. Due to excessive attention, the "buy a property, get gold" promotion at Huafa Huitianfu was halted on June 9, 2023.
Unexpectedly, two and a half years later, the situation has seen a dramatic reversal. As of February 9 this year, the international gold price has climbed from around 450 yuan per gram in 2023 to approximately 1120 yuan per gram, an increase of nearly 149%. Consequently, the value of the gold received by buyers of Huafa Huitianfu has surged dramatically. For the 1000 grams of gold given with the 119-square-meter unit, originally worth about 45万元, the current market value has soared to approximately 1.12 million yuan.
Simultaneously, property prices in Lin'an District have undergone a significant correction. In the area where Huafa Huitianfu is located, prices have fallen from about 22,000 yuan per square meter in 2023 to a current listing price of approximately 14,700 yuan per square meter. If a transaction occurs at the current listing price, the market value of the 119-square-meter property originally bought for 2.5 million yuan would have decreased by about 870,000 yuan. However, the 1000 grams of gold received is now valued at 1.12 million yuan. Offsetting these amounts, the homeowner has not only avoided a significant loss from the property's price drop but has actually achieved an asset appreciation of approximately 250,000 yuan due to the gold's sharp increase.
"I really didn't expect this. I bought the place back then for the discount. The property price has fallen now, but the gold has gone crazy," remarked one homeowner who purchased a 100-square-meter unit. "Is this just a case of dumb luck?"
While this "accidental hedge" is somewhat coincidental, it illustrates the age-old wisdom of asset diversification—"not putting all your eggs in one basket"—and ultimately served as a shield against volatility in a single market.
It was reported that on August 3, 2023, news of a man selling the 1000 grams of gold he received with his property purchase for 452,000 yuan attracted widespread attention. The homeowner, identified as Xiao Hui, an individual born in the 1980s from Lin'an, Hangzhou, cashed in the gold bars. Staff from Huafa Huitianfu previously stated that the "buy a property, get gold" promotion in June was aimed at clearing inventory and has since ended. Analysts pointed out that such methods are essentially a form of disguised price reduction.
Experts comment that peripheral areas face significant sales pressure. It's noted that not just Huafa Huitianfu, but many developments in Hangzhou's Lin'an District have been offering disguised discounts. For instance, Yuexiu Guiyueli promoted offers including "free renovation, free parking space, 10 years of free property management fees, and for some units, even 5 mobile phones," with limited-time discounts advertised as high as 600,000 yuan. In April this year, another project, Qingshan Hubian, also launched an activity offering gold worth 480,000 yuan, with a down payment starting from just 20,000 yuan.
Market observers suggest that the intense competition among developers in Lin'an is related to the current state of the local property market. According to statistics, the new home market in Lin'an District slowed overall in the first half of 2023, with cumulative net signings from January to June totaling 3,206 units, 613 units fewer than the same period the previous year, a decrease of approximately 16%. Monthly trend charts showed that apart from February and March, which saw higher signings exceeding 700 and 900 units respectively, signings in other months remained below 500 units.
Analysts indicate that peripheral areas like Lin'an currently experience high inventory pressure, leading developers to offer substantial discounts and promotions. They explain that during the previous property market upcycle, starting from the second half of 2015 until the first half of 2021, expansion in the peripheral markets of major cities was very rapid. Many areas developed new towns and districts, leading to significant land supply in peripheries. Developers, pursuing high turnover, acquired land in these areas, resulting in a large supply of new projects and severe homogeneous competition. Coupled with inadequate supporting infrastructure and the failure of promised industrial, transportation, and public service plans to materialize quickly, inventory pressure in these areas increased, prompting developers to launch various promotional activities.