"Property investors who purchased homes after 2009 will suffer a loss of more than 30 percent if they want to sell their properties now," said Ding Yi, a developer of luxury homes in Wenzhou.

Businessmen from the city, one of China's wealthiest, are well-known for their speculative activities in various sectors, especially the property market.

China tightened its curbs on the property sector in 2010, when house prices rose far beyond the reach of average wage earners.

The government issued a series of restrictions to control house purchases, such as requiring higher down payments and introducing property taxes.

After the central government tightened policies for house purchases, the enthusiasm of property investors, particularly from Wenzhou, cooled dramatically.

"Investors are staying away from the property market, and are waiting for prices to pick up before selling their assets," said Ding.

He added that a small number of investors were forced to sell their assets at losses of around 30 percent in order to repay high-interest loans.

Staying calm and waiting for the property market to recover is the best option for investors at the moment.

"I bought most of my properties before 2010, when the restrictions were imposed, and I am waiting for the housing market to recover, which will happen sooner or later," said Zhuang Chen, an investor from Wenzhou who owns 30 properties.

The mass exit of Wenzhou-based property investors from the property market has caused a sharp decline in sales of luxury properties in the city.

"Demand for high-end apartments has been quite low for the past six months, with an average of one apartment being sold every month," said Zheng Jian, a salesman at a property agency in Wenzhou.

Zheng added that most of the current demand for housing in the city comes from newlyweds or growing families.

"I haven't seen a single investor in the past half year coming to me for new luxurious apartments, which are mostly empty for the moment," said Zheng.

He added that the situation will remain the same for quite some time if there is no relaxation of the housing policy.

yuran@chinadaily.com.cn