October 26 -- Chinese property developers such as Longfor Properties (0960.HK), China Overseas Land and Investment (0688.HK) and Star River Group had in the second half of October suddenly offered discounts of between 20 percent and 40 percent for their property developments in Shanghai, reports 21ch.com.

Following the lead of the above developers, industry heavyweights, including China Vanke (000002.SZ,200002) offered steep discounts for their developments in Beijing.

According to Nie Meisheng, chairman of the All China Federation of Industry and Commerce Real Estate Association, property developers are offering huge discounts as the need to repay various types of loans by the end of the year has become more pressing.

The current tightening policies in place will not be removed until at least after the first half of 2012, said Nie. 

An insider from the Ministry of Housing and Urban Rural Development's policy research center confirmed in a telephone interview that the property purchase limits will not be relaxed in the next one year.

According to Soufun, transactions of new commercial residential housing in Shanghai during the first three weeks of October plunged 72 percent year-on-year to 302,700 square meters, the lowest level since 2004.

In the meantime, discounts of 10-30 percent are increasingly commonplace in first-tier cities throughout China, according to the report.

Units at a development by Longfor Properties in Beijing's Daxing district were being offered for sale from 11,800 yuan per square meter, while Longfor Properties had paid 7,519 yuan per square meter last year to acquire the land.

The current offer price of 11,800 yuan per square meter not only means that Longfor Properties will not profit from the development, it also fell below the 15,000 yuan per square meter mark, previously thought to be the minimum price for properties in Daxing district.

An insider from the sales department of Hutchison Whampoa (0013.HK) said property developers in first-tier cities are engaging in fierce price undercutting, and that Hutchison is switching its focus to Tianjin.

It was reported that new properties in second-tier cities, including Hangzhou, Tianjin, Nanjing and Chengdu were offered at discounts of between five and 20 percent.

A source close to the Beijing branch of the Housing and Urban Rural Development Ministry said many developers either switched into the commercial property business, or offered discounts once they heard of the government's resolve not to relex tightening policies.

Separately, the Nanjing Housing Public Funding Management Center raised the limit that individuals could borrow for housing from 200,000 yuan to 300,000 yuan. The change was effective October 21.

Shares of China Vanke rose 3.24 percent to close the morning session at 7.64 yuan per share.