Nestled in the center of a vast auction room, featuring faux marble walls and flanked by two crimson panels, resides the petite beige Wuling electric car. Its wheels are surrounded by a sea of golden paper while it warmly greets prospective customers within the Binjiang residence, a sprawling complex located to the north of Xi'an, in central China

Next to the car, a rice cooker, an air purifier, a refrigerator and an imposing electric kettle. All are gifts given to those who buy an apartment from this developer, who is struggling to find buyers at a time when the Chinese real estate market is going through an unprecedented crisis. "The gifts are worth around 40,000 yuan (5,175 euros), but if you don't want them, we can give you money directly," said a real estate agent in a suit.

The practice is common in China. Officially, developers are not allowed to lower prices beyond a certain range, often set by local authorities at 10% or 15% of average prices. Some developers have been accused of "malicious price-cutting."

In May, two companies in the city of Kunshan, near Shanghai, were fined for offering 25% price cuts without authorization. The unauthorized reduction affected sales of nearby homes, disrupting the normal order of the market the local property regulator explained to the Chinese press.

In response, property developers have shown a wealth of inventiveness that circumvent these restrictions: They often offer interior decoration, free parking spaces, and sometimes even gold bars with the purchase of a property. In 2022, some accepted payments in garlic or watermelons.

The result is that, despite two years of real estate crisis, official prices are virtually stable. According to the China Index Academy, a real estate consultancy, new property prices have fallen by 0.2% in the last year, and pre-owned property by 2.4%. In the absence of price cuts, the number of property transactions plunged by 19.1% year-on-year in August, and at least 80 more Chinese developers have defaulted over the past two years.

The desire to control prices within a narrow band dates back to 2016. In the aftermath of a dismal year for real estate, the authorities had eased purchases and lowered interest rates to the point that prices surged again. In some cities, prices rose by 20% to 30% the following year.

To limit these movements, which at the time trended upward, local authorities imposed limits on price movements, in addition to an arsenal of measures to restrict purchases: increased down payments, limits on the purchase of second homes restrictions on non-residents. Today, dozens of municipalities are backtracking in an attempt to revive the moribund market.

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