Has China changed tune on big discounts on new homes, after local authorities no longer view lower ‘market-led’ prices as ‘bad behaviour’?

Discounts of as much as 28 per cent at a project located an hour’s drive from the city centre of Shenzhen is described by local housing authority staff as market-led behaviour

Huge price cuts in Kunshan and Huizhou are one-offs, Centaline executive says

2-MIN READ2-MIN

The average prices of new homes in Huizhou’s Daya Bay usually range between 14,000 yuan to 17,000 yuan per square metre, according to a local property agent’s website. Photo: Shutterstock

Published: 7:04pm, 22 May 2023

Local authorities in China appear to have changed their tune on big discounts by property developers following weak homes sales in April, calling lowered prices normal and “market-led” rather than “bad behaviour”.

Discounts of as much as 28 per cent at a project located an hour’s drive from the city centre of Shenzhen, China’s technology hub, were described by local housing authority staff as market-led behaviour, according to a report in Chinese media National Business Daily on Friday. The discount would be allowed if there were no other problems the staff member said, according to the report.

The project in Huizhou’s Daya Bay area was priced at 6,800 yuan (US$967) to 7,200 yuan per square metre, or about 24 per cent to 28 per cent below its declared price of 9,000 yuan to 10,000 per square metre, according to National Business Daily. The project’s previous declared price was 14,741 yuan per square metre, which would have meant a discount of as much as 54 per cent, according to the report.

The system of declared prices was introduced by China’s National Development and Reform Commission in 2010, and requires developers to report the price caps for all authorised projects to local authorities before their launch. Developers cannot sell properties at prices higher than those reported to authorities.

Huizhou’s big discounts come a couple of weeks after local authorities penalised two developers in the county-level city of Kunshan for price cuts in excess of 25 per cent on new homes, saying it was bad behaviour that could disturb the normal order of the real estate market and cause social instability.

The average prices of new homes in Huizhou’s Daya Bay usually range between 14,000 yuan to 17,000 yuan per square metre, according to a local property agent’s website.