Guangzhou city said to allow property developers to lower new home prices by 20% to boost sales – report

 

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The city of Guangzhou, capital of South China’s Guangdong province and one of the country’s four tier-one cities, is reportedly planning to allow property developers to slash new home prices by as much as 20% to boost sales, reported Chinese news outlet Yicai Global, citing industry insiders.

Guangzhou will allow developers to raise their prices a maximum of 10% or cut them by 29% from the prices registered with regulators, compared to previous a maximum of 6% change from the registered prices, according to the report, adding that it’s not determined yet in which areas of the city the new policy will be implemented.

A realtor confirmed the intended policy shift that should cover the whole city of Guangzhou to Yicai Global. The policy should provide developers with more room to adjust their prices but not all property prices will fall by 20 percent, he said.

The previous 6% limit was set to guide market expectations and prices during a property boom, but the market environment has fundamentally changed, so it’s necessary to give developers greater pricing autonomy to boost sales, said Li Yujia, chief researcher at a residential policy center of the Guangdong Urban & Rural Planning and Design Institute.

In the first half of this year, new home transactions in Guangzhou fell 35% from a year ago, according to data from Centaline Property. Second-hand home sales in the city tumbled 44% from a year earlier. During the three-day Mid-Autumn Festival holiday, the sold area of new homes in the city plunged by 56% on year to 40,000 square meters, according to China Index Academy.