Three major property developers put more than 1,000 apartments for sale for only rmb 4,000 (US$ 563) per square meter in downtown Dongguan, China's leading manufacturing city in Guangdong Province, at the turn of February and March. The price plunged by 34% compared to last July, when the price reached the record high.

Some predicted the price collapse in Dongguan.

The rmb 4,000 apartments are all in mainstream estates in the city. This price cut will be influential to the property market of Dongguan in 2008.

The average unit rate of the top 10 housing sellers last month has already dropped to around rmb 5,500  (US$ 774), almost the level in 2006.

There are various reasons for the price plunge, according to some local insiders:

Firstly there is an oversupply of housing and many buyers are waiting to see how this affects the market.

Secondly many Taiwanese and Hongkongese companies have withdrawn from Dongguan due to industry transformation resulting from China's new Labor Law. In consequence, market demand is shrinking.

Thirdly, a poor sales performance in the first two months of the year have led to a difficult financial situation for developers.

Last but not least, the property price drop in other cities like Guangzhou, Shenzhen and Shanghai has dampened developers' confidence and consolidated potential buyers' wait-and-see stance.