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On July 31, the Zhengzhou Municipal Housing Security and Real Estate Administration issued an official announcement to cancel the price guidance for commercial housing sales. The notice stated that after research by the Zhengzhou Municipal Government, the housing security department will no longer provide guidance on the sales price of newly built commercial housing, and developers will sell according to their own pricing and handle the procedures for pre-sale (sales) permits (filing) for commercial housing.

Zhengzhou previously implemented guidance on the sales price of newly built commercial housing in order to stabilize housing prices. As the market environment changes, the cancellation of the price guidance policy is a decision made by Zhengzhou based on market development conditions, aimed at promoting the healthy development of the real estate market.

Zhengzhou is not an isolated case. According to statistics from the China Index Academy, this year, cities such as Shenyang, Lanzhou, Zhengzhou, and Ningde have clearly stopped implementing price guidance for newly built commercial housing sales; Yangjiang, Zhuhai, and Wuhu have also optimized their price limit policies, such as shortening the time interval for adjusting the registered prices and canceling the price difference limit for each floor.

"Housing is a commodity that affects the national economy and people's livelihood. When the price is discussed in the project planning, the development and reform department will review and file it, and the housing and construction department will also approve the pre-sale price." Li Yujia, chief researcher of the Housing Policy Research Center of Guangdong Provincial Urban Planning Institute, said that the principles of commercial housing price management are "clear pricing" and "one price for one house". After the developer applies for pre-sale, the price can freely fluctuate up and down by 15% based on the pre-sale approval price. If it exceeds 15%, they must reapply for pre-sale.

In recent years, the prices of commercial housing market have been adjusted deeply, and developers have a strong desire to promote sales, but most cities still insist on price management. Li Yujia said that this is because, considering the top-level design of stabilizing land prices, housing prices and expectations, especially based on local land sales and subsequent project approvals, many cities still insist on price management to prevent too fast a decline, which would impact local land sales and other project price approvals.

However, recently many cities, including Zhengzhou, have optimized their price guidance systems. Some have simply stopped guiding the sales prices of commercial housing, some have expanded the range of free floating of pre-sale prices by developers, and some cities have optimized the price review process.

For example, at the end of May, Shenyang issued a number of optimization policies to further activate the real estate market in Shenyang and promote the further stable development of the property market. The announcement showed that the purchase and sales restrictions in the entire Shenyang area were lifted, and the sales price guidance for newly built commercial housing would no longer be implemented.

On June 22, Lanzhou also issued a document stating that it would continue to implement the previously issued "Several Measures on Further Promoting the Stable and Healthy Development of the Real Estate Market", cancel restrictions on home purchase qualifications, cancel the limit on housing listings, and cancel the filing of prices for newly built commercial housing.

Why did Zhengzhou cancel the "price limit" for new homes this time? Li Yujia believes that on the one hand, developers have drastically reduced prices to promote sales, and the guidance of the Housing and Construction Department has become ineffective; in addition, giving developers the right to freely adjust prices and exempting the redundant process of secondary application conditions will help developers to better promote sales. More importantly, it sends a signal to the market that prices are freely set and fluctuate, and buyers and sellers are responsible for their own actions.

Liang Botao, general manager of Henan Branch of China Index Academy, believes that after the policy adjustment in Zhengzhou, the restrictive real estate policies have been completely lifted, and the commodity housing market has returned to a highly market-oriented operation. At the same time, Zhengzhou has vigorously promoted talent apartments and allocated affordable housing, and the dual-track operation pattern of "affordable housing + commercial housing" has been gradually established, which has accelerated the formation of a new model for real estate development in Zhengzhou.

"In addition, abolishing the price limit will help guide the market to supply high-quality commercial housing, promote the optimization of the housing supply structure, and better meet residents' demand for improved housing, which will have positive significance for the healthy development of the real estate market," he believes.

Li Yujia also said that removing the price limit will help developers set prices freely, but it may also increase the market's expectation of falling housing prices, which in turn will affect the prices of second-hand houses. "Of course, when there are a large number of houses for sale in the market, the supply and demand relationship is not tight, or even oversupply, that is when the market plays a decisive role. Price is the criterion of market supply, demand and expectations."

Looking back at the Zhengzhou property market, the local government has introduced policies many times this year to optimize the regulation of the real estate market. At present, the down payment ratio for commercial personal housing loans in Zhengzhou has been adjusted to 15% for the first set and 25% for the second set, and the loan interest rate is 3.35% for the first set and 3.45% for the second set. The provident fund loan interest rate has been reduced to 2.85%. Combined with the favorable factors such as the "old for new" housing policy, the commodity housing market in Zhengzhou has rebounded in the second quarter.

Data from the Zhengzhou Housing Administration Bureau showed that the sales area of ​​commercial housing in Zhengzhou in the second quarter increased by 6.05% in April, 65.78% in May and 6.35% in June compared with the previous month. Among them, the sales area of ​​commercial housing in June reached 1.2533 million square meters.

The local "old for new" policy has promoted the digestion of inventory in the local commodity housing market by encouraging residents to replace old houses with new ones. According to data from the Zhengzhou Housing Association, since June, the number of visits to sales offices in Zhengzhou has increased by about 30%, the number of second-hand house viewings has increased by about 40%, and the number of "old for new" public consultations has increased by about 50%. As of June 30, Zhengzhou Chengfa Anju Co., Ltd., the main body of second-hand housing acquisition, has registered more than 9,000 second-hand housing sources and signed acquisition agreements for 2,637 units.

Zhengzhou is also vigorously organizing group buying activities to promote the sales of new homes. On July 21, Zhengzhou launched a group buying activity for nearly 50,000 commercial houses. The group buying activity will last for several months, during which the first 5,000 buyers will be given a consumer voucher subsidy of 5,000 yuan each. Zhengzhou plans to hold no less than 50 group buying activities for commercial houses from July 20 to December 31, 2024.