New Shenzhen Government property policies forced developers to slash down prices
The new property policies by the local government of Shenzhen which decreed that starting May 1st this year, new home prices must be kept under RMB 22,000 per square meter, forced property developers to slash and trim their prices down to ensure their full-year sales targets is reached and the same time to acknowledge the local government property measures.
Orders from the local Urban planning, Land and Resources Commission clearly emphasizes that all sale in residential properties must be sold at considerable prices and should not go beyond and rise above the maximum amount defined by the local government. Shenzhen’s new policies will prohibit developers from attaining pre-sale licenses for properties sold above the maximum price, limit price increases at projects in different districts of the city and blot out licenses for luxury homes.
In the first quarter of the year, prices for the average housing fell from more than RMB 20,000 per square meter in January to nearly RMB 19,000 in March. Developers are trying to make tracks and taking measures to encourage sales before the policy takes in to effect. Some developers like the China Overseas Land & Investment Ltd. punch for the moon and gave discounts of as much as 20% on current market prices and are selling 1,000 apartments at a price of RMB 9,000-RMB 11,000 per square meter. The bold move initiated by leading developers like China Vanke Co. Ltd. and China Overseas Land & Investment Ltd. shook the local real estate market, as large numbers of home buyers have rushed to snap up properties, forcing other developers to make similar price cuts. Other Shenzhen-based developers are already following suit, with some cutting their prices to the lowest possible to attract sales.
Some market watchers said they believe the price cuts are unlikely to become a trend since a limited amount of new properties are available in Shenzhen at present.