(Yicai) Sept. 16 -- As the real estate market gradually stabilizes with the arrival of the traditional peak season, property developers in major Chinese cities are testing the feasibility of higher prices, either by withdrawing discounts or lifting prices.

Poly Developments and Holdings Group, a major state-owned builder, rolled back discounts or raised prices for several projects in key cities, Yicai noticed. Three projects in Shanghai saw a unified price increase of 1 percent, and multiple projects in Nanjing hiked prices by 1 percent to 3 percent.

Yuexiu Group also withdrew discounts for some of its projects in Chengdu to respond to shifting supply and demand, an insider at the Chinese developer told Yicai. On one hand, new policies rolled out in August to encourage finished home sales have delayed the launch of new residential projects; on the other hand, the peak sales season has arrived, bringing more fence-sitting buyers into the market.

All three batches of new houses in the Tianyue Yunqi project in central Chengdu that Yuexiu put up for sale between June and September sold out in less than a week, according to the insider. Another nearby project, the third phase of Tianyue Yuncui, also posted solid sales, securing nearly CNY80 million (USD11.9 million) last week.

After sales picked up in Guangzhou’s Panyu district in the past two weeks, developers began phasing out discounts, an employee at a local real estate agency told Yicai. “Projects with brisk sales pulled discounts last week, and slower-selling ones will likely follow suit this week or next week.”

This round of price adjustments is a tentative move by developers, Zhang Bo, president of the 58 Anjuke Research Institute, told Yicai. Most actions involve rolling back discounts and cutting preferential terms, as only a small number of projects have raised government-filed prices, he added.

The scope of price changes remains relatively modest, given that they are only a local and structural phenomenon, Zhang said. In fact, they should not be interpreted as outright price hikes because they do not signal nationwide price increases.

Developers behind these price adjustments are mostly state-owned enterprises, Zhang noted. The vast majority of private developers have not followed suit, as their core operational priority remains destocking inventory and preserving cash flow, he explained.

The price-hike signals released by some projects at this stage are just some marketing tactics, said Sun Hu, senior industry practitioner and chairman of Guangzhou S.P.I. Design. Developers may first lift prices, and then reintroduce discounts during the National Day holiday at the start of next month to push more buyers to close deals, he noted.

Rising costs constitute another key driver behind developers’ tentative price hike. Under the new presale rules, the timeline for developers to access presale funds has been pushed back from after property sales to after project completion, directly lifting their financial costs, Sun explained.

In addition, the new policy’s requirement for project-based corporate structures has cut off cross-project capital support from parent groups, so each project company must independently bear funding pressure for its own development, Sun added.

Editors: Tang Shihua, Futura Costaglione