Chinese regulators scold developers for ‘bad behaviour’, fearing massive price cuts could lead to social instability
- One developer in Kunshan, Jiangsu province, was offering discounts of over 25 per cent on new homes, while another was giving away free parking spaces
- New home sales in Kunshan fell 14 per cent month on month in April as homebuying sentiment weakened
Regulators in China’s southeastern Jiangsu province chided two developers for their “bad behaviour” after they offered discounts on new homes in excess of 25 per cent, fearing it could cause “social instability”.
Housing authorities in Kunshan, a county-level city, said that Kunshan Jiabao Wangshang Properties and Kunshan Changtai Properties had “slashed prices significantly and arbitrarily that could disturb the normal order of the real estate market and cause social instability”.
Both companies were pulled up for their “bad behaviour” and ordered to rectify the issue immediately and close online registrations related to buying homes in their projects. The regulators stepped in after previously capping the discounts at up to 15 per cent.
“We hope all developers will learn a lesson and comply with the law and industry regulations seriously,” regulators in Kunshan said in a notice on May 5, adding that they will strengthen oversight and punish developers resorting to “wrongful sales tactics”.
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The two developers launched campaigns to boost sales during the May Day holiday. While one of them offered buyers discounts of up to 26 per cent, the other dangled a free parking space. An 86-square-metre home was available for 16,000 yuan (US$2,311) per square metre, down from 21,733 yuan per square metre, according to an advertisement circulated online.