Guangzhou’s New Pre-Owned Property Reference System Could Cut Prices in Half
Guangzhou in southern China has launched a price reference system for pre-owned properties that is aimed at preventing real estate agencies from inflating prices, a move that could cut property rates by as much as 50%.
The mechanism provides reference prices for institutions involved in property transactions based on factors like estimated prices, rates from historical sales over the past year and prices of new developments in the area, according to a Tuesday statement (link in Chinese) from the Guangzhou Municipal Housing and Urban-Rural Development Bureau.
The mechanism is aimed at preventing real estate agencies from inflating figures at will. Huang Tao, a project manager at Centaline Property Agency Ltd., Guangzhou’s system could mirror one established in fellow Guangdong province metropolis Shenzhen, where banks need to screen home loans based on a reference price. “Some banks in Guangzhou have already started using the reference prices from Wednesday,” Huang said.
Guangzhou joins other cities across China in launching a reference mechanism to curb unreasonably high prices, with Shenzhen the first city to roll it out. In February, the city’s housing watchdog released reference prices for pre-owned properties in 3,595 residential compounds and prohibited banks from processing loans in amounts higher than the reference price.
Other provincial capitals like Sanya, Chengdu, and Xi’an have also followed in Shenzhen’s footsteps (link in Chinese).
Prices of most of the first pre-owned properties to be included in the Guangzhou system in 96 compounds across the city (link in Chinese) are expected to be cut by between 30% and 50%, according to Caixin’s calculations.
A property owned by Hong Kong-listed Poly Property Group Co. Ltd. and located in the city’s central district, saw its reference price listed at 96,957 yuan ($15,017) per square meter, down from a previous average transaction price of 153,800 yuan, according to Beike, an online property information platform.
Some home sellers in the listed neighborhoods have already asked real estate agencies to delist their properties due to the new “unacceptable” prices and have taken a “wait-and-see attitude,” an agent told Caixin on condition of anonymity.
“It is no surprise to see transaction volumes of pre-owned house in Guangzhou take a sharp decline,” said Deng Haozhi, a real estate specialist in the city.
Contact reporter Manyun Zou (firstname.lastname@example.org) and editor Flynn Murphy (email@example.com)
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