| HONG KONG
HONG KONG May 30 Some Chinese cities are trying
to limit property price cuts to 15-20 percent from the original
asking price, developers and real estate agents said on Friday,
in a bid to brake a steeper industry downturn and boost
confidence in the market.
The eastern city of Hangzhou and the southern city of
Dongguan have recently reinforced regulations first imposed in
2011 that prevented developers from adjusting prices, up or
down, on residential projects by more than 15-20 percent
compared with what was registered with authorities.
Many local governments, including in Hangzhou, had eased
restriction on home purchases since April to boost the local
economy, as home prices fell to 11 month-lows after growing at
double-digit rates last year.
Home prices in China started to cool in late 2013 after the
government stepped up a sustained campaign to clamp down on
speculative investment and easy credit, fearing the risk of a
"The (Hangzhou) government hadn't strictly enforced the rule
in the past, but recently it has issued a statement reinforcing
it," said a developer, who declined to be named due to the
sensitive nature of the issue.
"The rule was initially intended to stop developers from
marking up prices too much before this year," said Andy Lee,
realty Centaline chief executive of China southern district.
"Now we're seeing the rules being enforced because prices in
Hangzhou and Dongguan have dropped more than 15 percent."
Local media said some buyers in Dongguan had failed to
register new homes online that were purchased after a more than
15 percent discount.
Developers and market observers said the impact of limiting
price cuts would be small as developers could still lower prices
for new projects and re-submit an adjusted price list for
existing projects with authorities, which usually takes 7 to 11
days to review.
Some developers also said they usually offered promotions
rather than actual discounts to boost sales. The stricter limits
thus raise more concerns for the small developers.
"The impact on the smaller, local developers may be bigger
because they have fewer projects to generate cashflow," said
Toni Ho, an analyst at BOCOM International.
(Reporting by Clare Jim; Editing by Jacqueline Wong)