(Yicai) Aug. 23 -- Developers Powerlong Real Estate Holdings and Youngor Real Estate have halved the price of homes in a residential apartment complex that they are building in Zhuhai, a city in China’s southern Guangdong province, in response to the sluggish property market.

Apartment in Powerlong City of Jinwan are now priced at as little as CNY14,000 (USD1,920) per square meter, half of what the firms told the authorities they would ask for in February, local realtors told Yicai. The units have a floor area of between 68 square meters and 110 sqm and deliveries are expected to start next June.

The large discount does not breach government regulations as the developers already lowered the price in April and July in government filings and so long as the actual selling price is no less than 85 percent of the price filed with the authorities, a staffer at a local branch of real estate agency Lianjia said yesterday. 

Developers are allowed to adjust the filed price of new homes every three months, a local housing regulator told Yicai today. After making an adjustment, they are allowed to offer homebuyers a discount of as much as 15 percent on the newly stated price, he added.

China’s builders are required to file prices for each unit of new housing projects with local governments before bringing the asset to the market, and they are allowed a certain premium or discount on the filed price when they sell the property. In Zhuhai the maximum discount is 15 percent.

But despite the price cuts, potential buyers are still very hesitant, sources said. This might have something to do with Shanghai-based Powerlong’s financial situation, as construction of a nearby shopping mall, Powerlong Plaza, has stalled.

The deep price cuts at Powerlong City of Jinwan are not unique in Zhuhai, according to filings for projects in the city’s Jinwan district, where Powerlong City of Jinwan is located, and Doumen, both far-flung districts.

For example, a project in Doumen had an average selling price of CNY18,002 per sqm when sales started in 2019. After a number of adjustments, the average listed in government paperwork for the remaining 19 unsold units is now only CNY10,795 per sqm. With promotions, that falls to about CNY9,200 (USD1,262), almost half of the project’s initial filed price.

The drop in prices is mainly due to the large stock of new housing and less developed public infrastructure in outlying areas. Although the price of some projects in downtown Zhuhai rose last year, far-out districts such as Doumen and Jinwan are oversupplied, with selling prices heading lower, according to a WorldUnion report.

Editors: Tang Shihua, Kim Taylor