A growing number of would-be homebuyers in Shenzhen, Shanghai and Beijing could walk away from signed purchase agreements because they fear house prices are set to fall heavily, say estate agents. By quitting now and forfeiting their deposits, they believe they will be able to cut their losses by returning to pick up bargains after prices have fallen.

"The property market is entering a chilly winter and genuine homebuyers will not return until prices have dropped at least 20%," said Samuel Wong, a director in the Shenzhen office of Midland Realty.

The collapse of confidence was triggered by a State Council decision announced last Thursday that minimum down payments on first homes of more than 90 square metres would be lifted from 20% to 30%; and from 40% to 50% for second homes.

South China Morning Post