(Yicai) Dec. 11 -- Chinese regulators are starting to accept bigger property price cuts amid real estate developers' liquidity woes.

Officials are not opposing recent price decreases even though the unwritten rule used to be that new homes should cost no less than 85 percent of the price filed with the government, Yicai learned.

Local governments used to set bottom prices for new homes so that selling prices could move just 15 percent up or down from that. As real estate developers started to resort to bigger discounts in recent years amid their liquidity pressures, local governments began to intervene. When the market was booming, sales prices used to be limited to equal the filed price.

For example, one residential home in Suzhou, Jiangsu province, was sold at about CNY2.1 million (USD292,300) or 75 percent of its filed price, whereas the average price for this project is 80 percent of the filed price or over CNY2.2 million, according to a netizen. 

A government official in Suzhou's Xiangcheng district, where the project is located, said to Yicai that if a developer offers discounts to promote sales it does not violate China's laws on prices.

Suzhou used to have housing price limits, but the government has not recently restricted price cuts too much, a real estate sales director in the eastern city said to Yicai, adding that developers are destocking and collectively slashing prices.

Lowered housing prices are common in Suzhou and discounts go from 5 percent to 8 percent for new projects in urban areas, whereas projects with sluggish sales are subject to 15 percent price reductions, and projects in outer suburbs are offering discounts of at least 30 percent, Yicai learned from a source at another property developer in eastern China.

Removing price restrictions is the latest trend in property market regulation, Li Yujia, chief researcher at a residential policy research center in Guangdong, said to Yicai. However, when loosening such rules, the government needs to find a way to prevent more drastic price drops that would further dampen market expectations, Li added.

Editor: Emmi Laine