Â
>>REAL-TIME UPDATES IN THE WIRE. CLICK HERE<<<
Â
Â
China’s southern metropolis Guangzhou has quietly removed the restrictions on new home prices, according to Chinese news outlet Caixin, citing multiple industry insiders, in an effort to allow property developers to boost sales with lower prices.
Before a new project enters the market, the developer of the project is still required to register the selling prices with the authorities, but the government will no longer provide a guiding price, according to the report, citing a source close to policymakers.
Developers now can determine property prices on their own and they can choose to raise or cut prices, according the report.
During the uptrend of the real estate market, the authorities either set the upper limit of property prices when they sold land or set guiding prices for particular districts, requiring developers to keep registered property prices below the guiding prices. During the market downtrend of the market, the authorities limit properties’ selling prices, for example, above 85% or 90% of the registered prices to limit the decline of home prices.
In the market downturn, the restrictions on home prices have obviously hindered property developers’ self-rescue efforts, the Guangdong Real Estate Chamber of Commerce had earlier said in a statement, urging the government to adjust the sweeping approach on home price management.
“Some real estate companies want to actively boost property sales with lower prices, in order to accelerate cash collection amid the sector’s liquidity crunch, but many local governments set restrictions on home prices, which limit developers’ ability to cut prices and launch promotions based on market situations and to make self-rescue efforts by boost sales with lower prices,” it said.