Hangzhou, the capital of China’s eastern Zhejiang province, launched a new rule last Friday in a bid to prevent the local housing market from collapsing, National Business Daily reported Tuesday.
The rule, published jointly by the city’s prices and housing regulatory bureaus, prohibits the sale of new homes at prices that are 15 percent or more below the level originally registered with the authorities, the report said.
The measure is seen by market participants as an effective price cut restriction on developers, as they will now be required to re-register their prices with authorities if they plan to lower the rate by 15 percent or more.
To clear misperceptions, both bureaus informed through the local media that the purpose of the new rule is aimed at regulating developers’ price reporting acts and making sure the housing market is in order. They said the move does not amount to a ban on price cuts as developers can still bring down their offers.
Hangzhou’s move comes as the city has been suffering from high inventory of commodity homes, which are estimated to number a record 125,000 units as of now, and falling contract sales prices.
According to data released by the National Bureau of Statistics on May 18, prices of new commodity homes in eight of seventy major cities fell in April. Hangzhou saw the biggest drop of 0.7 percent month on month.
Meanwhile, some industry insiders have pointed out that falling home prices are likely to affect land auctions in the city to some extent. Hangzhou’s land sales income in April is said to have amounted to 1.49 billion yuan (US$238.81 million), the lowest monthly figure since 2013.
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