The developer of Sangtai Danhuafu, a housing project in south China's Shenzhen City, was caught in the latest property market slump without preparation. Its price dropped from 20,000 yuan ($3,000) per square meter at the end of 2007 to 16,000 yuan ($2,300) this March. The drop has triggered complaints from those who bought houses at higher prices. This prompted the developer to refund the aggrieved property owners in two ways: For those who had not yet signed the purchase contracts, the developer sold the houses at the lower price; and for those who had signed purchase contracts, the developer returned some money to them in the name of decoration subsidies. This rebate package reportedly had cost the developer almost 30 million yuan ($4.3 million).

The move has caused creased brows among developers who worry that this might set a precedent if all buyers demand rebates based on the gap between previous property prices and current prices. Developers' worst fear is a house price freefall. Meanwhile, China's big property companies, such as China Vanke Co. Ltd., all said that they would do more to improve the quality of the residential sites but refused some buyers' requests to return the property to developers or issue refunds.

Those who support the rebate package believe the price decrease is a result of the government's regulatory policies, so it is necessary for the government or property developers to offer rebates to those who buy at high prices and do so for accommodation purposes rather than exploitation

Some say buyers who have not yet received house keys should be refunded, because the transaction is not finished until the property is theirs, and developers should maintain the property value for these people.

Opponents, who believe the rebate request is irrational, insist that home buyers should have forecast possible investment risks. Most importantly, it's clear that a large proportion of home buyers are speculators, who buy several apartments at a relatively low price and sell them high. If the speculators suffer from property market fluctuations, then they have gotten a taste of their own medicine, they say.

Refund reasonable

Su Zhenhua (www.southcn.com): Imagine that you paid 100,000 yuan ($15,000) more than others for the same kind of house just because you bought it 10 days earlier. No one would accept this.