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China's Zhengzhou city has recently lifted restrictions on ceiling and floor prices for new home sales, a directive published by the city's housing authority states.
This development could pave the way for further declines in property prices, exerting pressure on homeowners and China's struggling real estate sector. The regulatory body no longer sets guidelines on new homes' selling price; instead, developers now determine their own pricing strategies.
In recent months, some other Chinese cities like Shenyang in the northeast and Lanzhou in the northwest have also removed similar constrnts on property sales prices. These actions could potentially lead to a short-term decrease in real estate prices across the country as developers may adjust their prices downwards to clear inventory.
According to Ma Hong, an analyst at GDDCE Research Institution based in Shangh, more Chinese cities might relax property market regulations going forward, which could result in price drops and thus impact homeowners' wealth. However, he argues that this reduction will likely have limited repercussions on actual real estate purchases since many buyers may still be hesitant due to concerns about the timely delivery of new homes.
The Chinese government has expressed its commitment to support the completion of unfinished projects and repurpose unsold apartments for affordable housing. Meanwhile, Goldman Sachs predicts more mortgage rate reductions in China as well as additional funding and operational streamlining measures med at inventory management in real estate.
Ma suggests that without substantial financial d or liquidity relief for property companies, the overall situation in the Chinese real estate market could remn challenging. Reuters contributed to this story.
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This article is reproduced from: https://www.businesstimes.com.sg/property/chinas-zhengzhou-city-allows-developers-sell-new-homes-reduced-prices
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Zhengzhou City Lifting Property Sale Price Restrictions Chinas Real Estate Sector Under Pressure New Home Sales Ceilings and Floors Removed Developers Determine Pricing Strategies Potential Decline in National Property Prices Government Supports Unfinished Projects Affordable Housing