June 11, 2019 / 8:46 AM / 8 days ago

Chinese city tells property developers to cease offering drastic price cuts

BEIJING (Reuters) - The Chinese city of Enshi has moved to stabilize house prices amid a worrying property slump by urging developers to stop drastic price cuts, threatening punishing measures unless such “wrong behaviors” stopped.

Developers have slashed prices at some estate projects in Enshi, a small city with less than one million in the central province of Hubei, as many new projects further strained an already slowing market, according to a three-page document issued by the Enshi Real Estate Association to its members seen by Reuters on Tuesday. Enshi housing bureau confirmed the authenticity of the document.

“Some estate projects have sought to promote sales by cutting prices drastically and this has caused wide concern in the society and had a negative impact on Enshi’s property market,” said the document dated June 6, which listed ten “tricks” developers had pursued to cut prices in various ways.

The document said developers who fail to changes their ways would be reported and authorities would take “relevant measures”. It went on to say that the association would work with local housing authorities to set a price floor that developers must sell above.

A slowdown has been felt deeply in many provincial cities in China after the real estate market suffered a downturn in late 2018. Price cuts offered by developers have led to protests by angry buyers, making authorities wary of the risk of social unrest.

The picture is very uneven, however, as prices have risen sharply in some cities where authorities have rolled out support measures to counter a broader economic slowdown. And new home prices in China still grew at a solid pace in April, official data showed.

Zhou Shaobo, the president of the real estate association in Enshi, told Chinese newspaper ThePaper.cn in an interview late on Monday that “discipline” was needed to prevent a drastic fall in house prices.

Reporting by Yawen Chen and Ryan Woo; Additional Reporting by Beijing newsroom; Editing by SImon Cameron-Moore

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