Harbin, the capital of Heilongjiang province of the Communist Party of China (CPC), is the first major Chinese city to encourage property companies to cut prices, according to an official document that stands out amid strict enforcement of price restrictions. ‘Harbin is really short of money,’ some say, while others say the mainland economy is weak and that the barrier that won’t allow prices to fall is starting to shake.
On November 18 this year, the Northeast website published a document of Harbin City entitled “Notice on Relevant Policies to Promote the Stable and Healthy Development of the real estate market in Harbin during the Epidemic period”, which contained 14 specific measures. Article 11 says, “From now until December 31, 2020, development enterprises shall be supported and encouraged to further transfer their profits to the people who buy new commercial houses such as residential houses and residential apartments.”
Article 13 shows that, “actively guide and encourage enterprises to sell newly built commercial houses by means of discount promotion and group purchase according to market conditions.”
In addition, the withdrawal of provident fund to buy a house to facilitate and reduce the number of years for the payment of provident fund, but also lifted the partial restrictions on commercial housing, commercial housing in the use of loans, water and electricity is equal to the treatment of the ordinary property market.
After this document is published, cause market to pay close attention greatly. Local authorities on the mainland currently prohibit property companies from selling at reduced prices.
In June, the Communist party authorities in Enshi, Hubei province, banned local property developers from offering discounts of up to 30 percent. At the turn of 2018 and 2019, the price of a real estate in a county in Anhui province was cut, the back foot was interviewed, not only the price was restored as before, pre-sale permits were also suspended.
It is not just local authorities that are not allowing developers to cut prices. In September, more than 30 real estate companies in Henan met and agreed to stabilize real estate rather than take the lead in lowering prices.
For the first time on the mainland, Harbin, the provincial capital, has offered to cut prices for developers, according to The mainland’s New Weekly magazine.
To Harbin city’s practice, new weekly thinks above all is lack of money. In recent years, local Communist Party authorities have not allowed developers to cut prices, mainly out of fear that falling property prices would spill over into the land market and lead to a fall in land prices. Especially as the outbreak of the Communist Party of China (CPC) virus (Wuhan Pneumonia) has hit the mainland economy hard this year.
In the first 11 months of this year, Shanghai earned 270 billion yuan (RMB) from land sales, ranking first among mainland provinces and cities, while Harbin ranked 40th with 30 billion yuan. Hangzhou, also the provincial capital, ranked second in the country with 250 billion yuan in land sales in the first 11 months. Even in the first half, the worst of the plague, land sales reached 170 billion yuan, almost six times that of Harbin in the whole year.
‘From the point of view of local revenue, the logic behind not allowing house prices to fall is the same as encouraging house prices to fall today,’ the report said.
Second, according to the changes in the sales prices of commercial residential buildings in 70 large and medium-sized cities regularly released by the National Bureau of Statistics of the Communist Party of China, the prices of new and second-hand homes in Harbin fell from June to October for five consecutive months, and the prices have stagnated.
In 2019, Harbin, with a population of more than 10 million, ranked outside the top 40 in terms of economic aggregate, and its per capita GDP ranked near the bottom among provincial capitals. This is the most critical reason.
Finally, there is the slow annual outflow of population and the huge stock of new houses. There are too few houses, so houses in Harbin are difficult to increase and even harder to sell.
Critics say China’s urban property market is rapidly diverging, with years of “general inflation” likely to be over and the gap between big and small cities and between eastern and western cities widening as populations and economies become more concentrated. It remains to be seen who will be the next city after Harbin to encourage lower prices.
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