(Yicai Global) Nov. 15 -- Twenty-one Chinese cities, including Shenyang in Liaoning province and Tangshan in Hebei province, issued policies in the second half of the year to stem declines in residential property prices, according to local government websites.

The cities brought out administrative orders or instructed developers to stamp out malicious price cutting. Some also looked into price cuts disguised as ‘construction mortgage housing,’ which developers pledge as security for loans or financing from banks or other firms to build or develop future projects. They usually sell such properties at discount to secure funds quickly to repay creditors.

Most of the cities that have taken steps are third- and fourth-tier cities, Zhang Bo, head of the 58 Anjuke Real Estate Research Institute, told Yicai Global. House prices in some areas of these cities are dropping faster than in first and second-tier cities, as developers are more willing to sell at lower prices, he added.

Builders in first and second-tier cities such as Guangzhou, Xiamen, and Chengdu have also used construction mortgage housing as a disguise to sell property at lower prices.

The market regulator for the Jiawang district of Xuzhou in Jiangsu province ordered developers on Oct. 3 to stop the stop hiding price cuts behind construction mortgage housing.

Selling construction loan housing at a low price helps builders clear inventory, ease financial pressures, and get funds, according to Zhang Dawei, chief analyst at Centaline Property Agency. Some sell pretending the units are construction loan homes because they want to recover the money, but worry about complaints from buyers who have bought at a higher price, Zhang added.

Editor: Futura Costaglione