Accused of being "lagging behind" due to poor sales performance, a real estate company in Nanchang County, Jiangxi Province received a work letter from the local government department.
The letter is titled "Letter from Nanchang County Housing Security Center on the Marketing Work of the Xinguang Garden Project." The letter showed that the Xinguang Garden project ranked low in sales in the second quarter of 2023, which has seriously affected the development of the county's real estate market. It is hoped that the project will promptly adjust its marketing strategy according to market changes, increase marketing efforts, consolidate marketing responsibilities, interview, adjust, and dismiss the marketing team with poor sales, and submit sales rectification measures before July 15, 2023.
A relevant person from the Nanchang County Housing Security Center confirmed to reporters that relevant work letters had indeed been issued before.
Another staff member of the Nanchang County Housing Security Center told reporters that the current real estate market situation is indeed not very good, but government departments have introduced many supportive policies this year to boost market confidence and enhance market vitality. Companies should seize the opportunity to increase marketing efforts.
"Under the same market conditions, there are also projects with good sales performance in the jurisdiction. Some low-ranking projects have previously issued work letters to them. If the performance in the third and fourth quarters improves, it means that the project rectification is relatively in place. The starting point of this is good. I want to urge them to strengthen their marketing work. I hope that real estate companies can explore more ideas and speed up the sales of projects." The above-mentioned staff member said.
Only 11 units of the letter-receiving project were sold in the second quarter of this year
A real estate consultant for the Xinguang Garden project told reporters that the Nanchang real estate market is in the process of adjustment. Due to the poor market situation, the project sales performance is indeed not ideal.
"Nanchang County has previously introduced a house purchase subsidy policy. Eligible people can receive a subsidy of 200 yuan per square meter, which is indeed good for the market. Sales in the first quarter were okay, but the market cooled down in the second quarter, and not all projects sold well. Xinguang Garden projects are all The price is about 6,500 yuan/square meter, and some properties with poor floors and locations are priced at only 6,000 yuan/square meter. Such prices are already relatively low in Nanchang County, but buyers are now in a wait-and-see mood and believe that the market may continue to adjust,” said the above-mentioned real estate consultant.
The work letter shows that in the second quarter of 2023, a total of 4,244 units and 431,200 square meters were sold in Nanchang County, with the sales area increasing by 78.3% year-on-year. However, when the Nanchang County Housing Security Center checked the sales of the Xinguang Garden project developed and constructed by Huiren Group Co., Ltd., it was found that the Xinguang Garden project ranked low in the county’s real estate sales in the second quarter of 2023, with sales data of 11 units and a sales area of 1,129.11 square meters.
In terms of market changes, according to the China Index Academy's 100-city new residential price index, in July 2023, Nanchang's new home price index fell by 0.02% month-on-month, and the second-hand home price index fell by 0.54% month-on-month.
A real estate consultant for the Xinguang Garden project told reporters that if the market's wait-and-see mood does not change significantly, buyers are not willing to enter the market, and Nanchang County's home purchase subsidy policy expires at the end of this month, it is expected that project sales will be difficult to see a big improvement in the short term. "If the relevant departments can relax the management of real estate sales prices, through the method of exchanging price for volume, the project sales performance may be better."
Among many measures, can developers use discounts and price reductions? In this regard, the staff of the Nanchang County Housing Security Center stated that moderate promotions can be carried out within the floating range of the registered price, but the discount rate must not exceed the corresponding floating range.
Will the "price limit orders" in various places be adjusted?
Chen Xiao, a senior analyst at Zhuge Data Research Center, pointed out that it was relatively rare before that relevant local government departments put forward marketing rectification requirements for projects with poor sales.
"We supervise some real estate projects that are lagging behind in sales by sending work letters, with the intention of urging them to speed up sales. Judging from the specific situation of the project, due to the relatively remote location of the property and the location is not along the subway, it will face greater marketing pressure during the market exploration process, and the reason cannot be simply attributed to 'inadequate marketing'." said Yan Yuejin, research director of E-House Research Institute.
Zhang Dawei, chief analyst of Centaline Real Estate, believes that as the property market continues to be sluggish and the sales performance of real estate companies declines, problems will arise in the return of funds. Developers will definitely try every means to speed up sales to reduce their own pressure.
"The Nanchang County housing management department urging real estate companies to strengthen sales reflects that the real estate market continues to decline, and some local governments are very anxious. In the past, these local government departments were referees, but now they are starting to become athletes." Zhang Dawei said.
Chen Xiao believes that "this letter reflects the local government's close attention and emphasis on real estate sales, but it also puts certain pressure on real estate companies. The current cooling trend of the property market is still continuing, and the sales side is under pressure. Since the end of July, relevant departments have frequently spoken out about the real estate market and expressed their determination to optimize property market policies in a timely manner. However, the specific policy details have not yet been implemented, and the market downward trend has not been alleviated."
Many analysts pointed out that market fluctuations have their own regularity. There are multiple complex factors in the current adjustment of the real estate market. It is not just relying on policy support that can bring the market back to its previous track.
"Policies do play a certain role in stabilizing the property market, but policies should not place too high expectations on them. They should also take into account the fundamentals and changes in the market. As the urbanization process enters a new stage, subtle changes have taken place in the supply and demand relationship of the real estate market, population structure, economic environment and other aspects. The adjustment cycle of the property market may not end quickly in the short term and may last for a long period of time. We should not be too optimistic about the market outlook." Zhang Dawei said in an interview with reporters.
He further stated that price is an important factor in this round of property market adjustment. "If the real estate market is reduced to a certain level, the market bottom may come sooner, but if the sales price of new homes is strictly controlled, the market adjustment cycle may be longer. Based on this, local governments can moderately adjust the scope of the 'price limit order', which may help the sales of real estate companies."
