Enshi, Hubei Bans Price Cuts

As China loosens borrowing rules on local government borrowing, expect local governments to boost home prices in a bid to finance their borrowing with land sales.

iFeng: 罕见房价"止跌令"!已有城市管理断崖式降价
Sogou: Rare house price "stop falling order"! There is already a cliff-cutting price cut for city management
Although property transactions in some hot second-tier cities have been booming recently, transactions in some third-and fourth-tier cities have been sluggish and the pattern of property market differentiation has become more obvious. Under the pressure of decentralization, some buildings in some third-and fourth-tier cities have adopted price reduction and promotion measures, and some even upset market expectations due to excessive price reduction.

A few days ago, the Enshi Real Estate Association released the "Red Head" document of "Notice on Stabilizing the Price Warning of Enshi Real Estate Market", which investigated and verified the cliff-like price reduction problem that has been strongly reflected by the society, put forward early warning and corresponding rectification measures for 10 price reduction phenomena, and the HS also said that it would assist the competent authorities to carry out systematic restriction on the lower floor price of the record price and determine a benign price reduction range.

In response, a Chinese reporter from a securities firm called Enshi Housing and Construction Bureau to verify the case. The relevant person in charge said: "The housing price warning document of the City Housing Society is true. I have seen it. This was issued by the City Housing Society according to the market situation."

Industry insiders believe that Enshi City's current document reflects the guidance of stabilizing house prices, stabilizing expectations and stabilizing the market. The overall property market policy is mainly based on stability. Stability is actually a two-way adjustment. Excessive rise and fall in house prices are not allowed and should fluctuate within a reasonable range based on market planning and control objectives.

In addition, Enshi is located in the western part of Hubei Province and belongs to a typical third-and fourth-tier city. This restriction on price reduction is also considered to reflect the thinking of government departments to "support the market". Official data show that Enshi's GDP totaled 87.1 billion yuan in 2018, making it the only city and state in Hubei Province with less than 100 billion yuan. Last year, Enshi's GDP grew by 6.2%, also the lowest level in the province. Enshi City is one of the eight counties and cities under Enshi Prefecture and is also the seat of Enshi Prefecture government.

Enshi City in Hubei Releases House Price Stopping Order

A few days ago, the Enshi City Real Estate Association of Hubei Province released the "Red Head" document of "Notice on Stabilizing the Early Warning of Enshi Real Estate Market Price". The document pointed out that recently, with the gradual increase in the number of listed real estate projects, the gradual decrease in sales degeneracy, and the increase in sales pressure faced by various housing enterprises, various projects have adopted different sales methods and means. Among them, some real estate projects have taken drastic price reduction measures to promote sales. These measures have aroused widespread concern in society and have brought adverse effects to Enshi real estate market.

Recently, Enshi Housing Society organized relevant personnel to investigate and verify some real estate projects, reported relevant problems and put forward early warning in response to the problem of steep price cuts strongly reflected by the society.

Enshi Real Estate Association has listed 10 main manifestations of price reduction in some real estate projects:

1, high price filing, low price opening, a decrease of 800-1200 yuan per square meter

2. Pre-selling and selling by stages, with a price difference of 300-500 yuan per square meter

3. Failure to follow market rules for no reason resulted in a 200-500 yuan per square meter decline in the opening price.

4. Marking a low price to attract customers is actually a sales gimmick, which causes large fluctuations in the market and changes in purchase expectations.

5. Not pricing according to the law of cost and price, the comprehensive cost forms a huge contrast with the actual selling price, leaving an unsustainable development space for itself and going astray in development and sales.

6. Release low-price information in advance on the grounds of customer storage, or even charge deposit and card in disguised form without pre-sale certificate.

7. Cooperate with third parties to reduce prices by means of distribution, electricity sales, etc. Disrupt the market by reducing prices in disguised form in the form of project payment deduction room, internal welfare special price room, etc.

8. Selling at a sale price of 4,000-4,500 yuan per square meter, which has a negative impact on the whole market expectation.

9. improper sales means are adopted to arrange sales personnel to solicit customers outside other sales departments, which has extremely bad influence.

10. In violation of relevant regulations, the involved height of the floor was reduced to about 2.7 meters, laying hidden dangers of contradictions for late-stage home buyers.

In response, Enshi Real Estate Association issued warnings to enterprises with the above problems and phenomena, and requested relevant enterprises to take corrective measures to correct the current market disorder of malicious competition.

Specific measures include four:

1. Require all enterprises on sale to conduct self-examination and rectification

2. The HS will conduct special investigations and investigations on the invoiced buildings in the city and report the results of the investigations.

3. The HS will request the competent department of business to take relevant measures to curb the real estate that has caused serious market impact due to ineffective self-examination and correction.

4. The HS will assist the competent authorities to systematically restrict the lower limit of the filing price by dividing the land price and the location of each district, and determine a benign range of price reduction rates.

In addition, according to the surging news report, Zhou xing, president of Enshi real estate association, told reporters on the afternoon of the 10th that the notice was a self-discipline requirement within the association, calling on real estate development enterprises to consciously abide by relevant regulations and not to suddenly reduce the house price too low.

In response to the "Notice on Stabilizing Enshi Real Estate Market Price Warning" released by Enshi Housing Society via the Internet, the Chinese reporter of the securities firm called Enshi Housing and Construction Bureau to verify it. The relevant person in charge said: "The housing price warning document issued by Enshi Housing Society is true. I have read it. This was issued by Enshi Housing Society according to the market situation."

It is understood that Enshi City is the seat of the state government of Enshi Tujia and Miao Autonomous Prefecture (Enshi Prefecture for short), the political, economic, cultural center and transportation hub of the whole state. Enshi Prefecture is the only ethnic autonomous prefecture in Hubei Province. It is located in the southwest of Hubei Province. Enshi and Lichuan are two county-level cities and Jianshi, Badong, Xuanen, Xianfeng, Laifeng and Hefeng are six counties in the state. According to statistics of Guosheng Securities, Enshi Prefecture had 3.361 million permanent residents in 2017, with an average annual growth rate of 0.4% in the past three years. GDP in 2018 was 87.1 billion yuan, with a growth rate of only 6.2%, the lowest in the province.

Enshi's Order to Stop Falling Reflects the Signal of Stabilizing House Prices

Zhang Dawei, chief analyst of Centaline Real Estate, pointed out that Enshi is only a representative of an underdeveloped city in the country. Enshi belongs to a relatively backward region in the third and fourth tier cities and has a certain degree of dependence on real estate. However, Enshi is not the first city to issue a stop-fall order. Previously, the Ganxian District Housing and Construction Bureau of Ganzhou City, Jiangxi Province also issued a notice to the housing enterprises to "stop the sale of special-rate housing" and asked them to stop the sale of "special-rate housing" below the declared price. Anhui Hefei, Wuhu, Dangshan and other places of individual property prices have also been required by local authorities not to reduce prices or give penalties. "The core reason behind these phenomena is that the price reduction of real estate brings local land finance problems." Zhang Dawei said.

Yan Yuejin, research director of the think tank center of Yi Ju Research Institute, believes that the order issued by the Housing Society of Enshi City in Hubei Province reflects the guidance of stabilizing house prices, stabilizing expectations and stabilizing the market. Looking at the original policy alone, it seems to be an intervention in price reduction. However, judging from the 10 price reduction actions summarized in the document (large price difference for filing opening, large price difference for existing auction houses, large price difference last year, large price difference for publicity expectations, large price difference for actual sales of costs, low-price sales without license, misleading price reduction for special housing, improper sales, price reduction and fall in price, etc.), some of these price reduction actions violate the rules for housing sales and stabilizing the market, and obviously need to be controlled by the government.

In Yan yuejin's view, Enshi city's document further embodies the concept of "stabilizing house prices", that is, house prices are not allowed to rise or fall too fast, and house prices should fluctuate within a reasonable range based on market planning and regulatory objectives.

Prior to this, the Ministry of Housing and Construction gave early warning to 10 cities where house prices had risen too fast. Some cities have already increased their regulatory policies. Suzhou has been included in the "70+1" house price monitoring scope of the National Bureau of Statistics due to large fluctuations in house prices and land prices, and the annual increase shall not exceed 5%. Suzhou also said that during the two-month transition period, several major indicators of the real estate market could not be controlled, and the regulation would be increased immediately after July, including expanding the scope of sales restriction and raising the social security threshold for foreigners to purchase houses. In addition, Suzhou real estate long-term control mechanism has been reported to the Ministry of Housing and Construction.

"The overall property market policy is based on stability. Stability is actually a two-way adjustment. A sharp rise is definitely not stable, but a sharp fall is also not stable." Zhang Dawei said.

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