Though many Chinese real estate developers are facing severe financial problems, the government does not allow them to lower housing prices to speed up the inflow of cash. The communist regime is afraid that if it lets housing prices float, a freefall in the prices will occur and wipe out the tremendous savings that people have poured into their houses, and thus create social turmoil and shake up the Communist party’s rule.
On May 5, the Bureau of Housing and Urban-Rural Development of Kunshan City, Jiangsu Province, sent out an official notice to fine two companies for dropping the sales prices of their newly-built apartments by 20 to 30 percent. It said the two companies “had disturbed the regular order of the real estate market and created a social instability factor.”
On the other hand, the two companies, after lowering their prices, were able to sell their inventories quickly since the other companies stayed at the high price following the government’s request.
Source: Sina, May 7, 2023