In Wuhan, a real estate project has faced complaints from old homeowners due to a nearly 50% price reduction. The sales manager of the project explained that no units have been sold in the past half year, and with the end of the year approaching, they are facing financial constraints that could affect the completion and delivery of the units.
Starting from May this year, homeowners have been voicing concerns about the Wanhe Guanggu project, questioning the significant drop in unit prices from over 20,000 yuan per square meter to the current 12,500 yuan. They raised suspicions of malicious price reduction and asked whether the project had been refiled.
Multiple homeowners of Wanhe Guanggu have taken their complaints to the “Wuhan City Message Board,” highlighting substantial price cuts and seeking clarification from relevant authorities on the excessive deviation from the reference price range.
One homeowner mentioned that Wanhe Guanggu was initially priced at around 23,000 yuan per square meter during its opening in the first half of 2022, with a discounted sale price of about 19,000 yuan per square meter. However, the recent minimum selling price has dropped to around 14,000 yuan per square meter.
In response, the Natural Resources and Planning Bureau of Donghu New Technology Development Zone stated that adjusting housing prices based on market conditions falls within the autonomous operation of market entities and does not violate any legal prohibitions.
Wanhe Guanggu, the project under scrutiny, is developed by Wuhan Persimmon Culture Technology Co., Ltd., a subsidiary of Wuhan Cultural Tourism Group.
The sales manager surnamed Wang of Wanhe Guanggu told a reporter from China Business News on August 1st that in May, the company used housing as collateral to offset construction costs with Wuhan Construction Group at a rate of 18,000 yuan per square meter, and the construction party is now trying to sell this part of the housing through various channels. “We, as a state-owned enterprise, cannot arbitrarily reduce prices. The normal selling price from the sales department is between 17,000 and 18,000 yuan per square meter,” said Wang.
Wang, the sales manager, further explained that due to the overall downward trend in the real estate market, no units were sold from November last year until the end of May this year, and only one unit was sold in July. With the project slated for completion by the end of this year, addressing subsequent capital inputs is crucial. “If we do not use these housing units to offset construction costs, and if the construction team does not work, the handover will face complications,” he added.
In China, real estate developers are not free to determine the prices of their properties; they must go through official filing processes. Discounts on sales also require official approval and predefined price reduction limits, known as price ceilings. Nevertheless, due to the persistently sluggish sales and intense market competition, these price constraints are gradually being broken.
On July 31st, the housing department in Zhengzhou declared the cancellation of guidance on selling prices for commercial housing. Development enterprises can autonomously set prices for sales or complete pre-sale approval procedures.
Additionally, according to the China Index Research Institute, cities like Shenyang, Lanzhou, Zhengzhou, and Ningde have ceased implementing guidance on new residential properties’ selling prices this year, effectively abolishing sales price restrictions.
Industry insiders told the Beijing News that more cities may follow suit with such policy adjustments in the future.
Regarding the lifting of housing price restrictions in Zhengzhou, Li Yujia, Chief Researcher at the Housing Policy Research Center of Guangdong Province City Planning Institute, believes that removing limits on commercial housing prices signifies freedom in pricing and fluctuations, with buyers and sellers assuming responsibility, ensuring that early homeowners do not bring trouble to developers due to subsequent price reductions.
In response to these developments, a netizen named “Chen Yudong” expressed puzzlement, stating, “Only allowing prices to go up, not to go down. As a homeowner, I find it hard to understand. You can only raise prices when selling a house and keep the money in the bank, but not lower the price. This doesn’t make sense. The price of a house should be dictated by the market and not excessively interfered with.”
Another netizen, “Grandpa,” commented, “It seems like the government wants to control everything, but ends up not managing anything well. If they lack the ability, why not leave it to the market?”