Recently, news that housing prices in the Qiushui Square area of Honggutan District, Nanchang, have dropped from 28,000 yuan per square meter to 19,000 yuan per square meter has drawn widespread attention. As a core area of Nanchang, the properties around Qiushui Square were once a popular choice for homebuyers seeking improved living conditions. Now, with prices undergoing such a significant correction, many early buyers feel anxious and even angry. Some are shouting "outrageous," some are preparing to defend their rights, and there are even rumors that certain owners are planning to collectively return their homes or demand that developers compensate the price difference.

Fluctuations in housing prices are a normal market phenomenon, but when the decline approaches one-third, it ceases to be merely an economic issue and becomes a matter involving the vital interests and legal relationships of countless households. As lawyers, we are more concerned with the following: what legal rights do homebuyers have after a price decline? Are developers' promotional price reductions compliant? Can signed contracts be rescinded? How should mortgage loans be handled? This article will examine, from a legal practice perspective, the risks and response strategies for both homebuyers and developers.

1. If housing prices fall, can homebuyers demand a refund or compensation for the price difference?

First, it should be clarified that a commercial housing sales contract represents the true intentions of both parties. Once signed and effective, it is binding on both parties. Article 509 of China's Civil Code stipulates that parties shall fully perform their obligations in accordance with the agreement. A decline in housing prices constitutes a market risk. Unless the contract explicitly contains a "price protection clause" or "price reduction compensation" provision, the purchaser has no right to unilaterally demand that the developer compensate for the price difference or return the property.

In practice, some homebuyers attempt to rescind contracts on the grounds of "change of circumstances." Under Article 533 of the Civil Code, a change of circumstances requires that "after the contract is formed, a major change occurs in the basic conditions of the contract that was unforeseeable by the parties at the time of contracting and does not fall within commercial risk," and that continued performance is clearly unfair to one party. However, in judicial practice, courts are extremely cautious in recognizing a change of circumstances; fluctuations in housing prices are typically classified as commercial risk rather than unforeseeable changes in basic conditions.

For example, in the judgment (2021) Gan Min Zhong No. XXX, the Jiangxi Provincial High People's Court clarified that housing price fluctuations are inherent market risks that buyers should bear themselves, and it does not support terminating the contract on the grounds of price decline. Therefore, unless the developer has engaged in false advertising, fraudulent sales, or other statutory grounds, it is difficult to obtain support for a request to return the property.

2. Are developers' price reduction promotions legal? Can homeowners defend their rights against "malicious price reductions"?

Another major grievance of the property owners is whether the developer's significant price reduction within a short period constitutes "malicious price reduction" or "unfair competition." From a legal perspective, as a market entity, the developer has the right to adjust prices based on market supply and demand. Article 6 of the Price Law stipulates that, except for government-guided prices or government-set prices, commodity prices shall be subject to market-adjusted pricing, formulated independently by the operators.

But price reduction is not without boundaries. If developers engage in the following behaviors during the price reduction process, they may cross the legal red line:

1. **False Advertising**: If a developer promises "never to lower prices" or "value preservation and appreciation" during sales, and subsequently significantly reduces prices, this may constitute false advertising, violating Article 4 of the Advertising Law and Article 8 of

2. **Harming the rights of earlier home buyers**: If the price reduction is accompanied by lower delivery standards, reduced decoration specifications, delayed delivery, or similar actions, it may constitute a breach of contract, and home buyers have the right to hold the seller liable in accordance with the contract.

3. **Disrupting market order**: If the price reduction is excessive and accompanied by panic buying or panic selling, it may be deemed as disrupting the real estate market order. However, the criteria for such a determination are extremely vague and are rarely applied in practice.

Therefore, if property owners wish to defend their rights on the grounds of "malicious price reduction," they need to collect evidence such as advertisements, brochures, and chat records of the developer's price guarantee commitment; otherwise, relying solely on the price adjustment will make it difficult to obtain legal support.

III. Can losses be stopped if the contract is signed but not yet registered online or not yet disbursed?

For buyers who have signed a subscription agreement but not yet completed online registration, or who have completed online registration but whose loan has not yet been disbursed, the situation is slightly different.

A subscription agreement usually constitutes a preliminary contract. Under Article 495 of the Civil Code, if the subscription agreement does not explicitly stipulate that the housing price is non-adjustable, and the parties have not yet signed a formal sales contract, the purchaser may attempt to negotiate with the developer to rescind the preliminary contract. However, if the subscription agreement has already locked in the housing price, rescission may constitute a breach of contract and trigger the deposit penalty rule.

For cases where the online contract has been signed but the loan has not yet been disbursed, if a homebuyer wishes to cancel the purchase due to falling housing prices, it is necessary to check whether the contract stipulates that failure to obtain the loan can serve as a condition for rescission. If there is no such stipulation, the contract must be performed as agreed; otherwise, the buyer may be held liable for breach of contract by the developer.

In practice, we advise such homebuyers to first communicate with the developer, seeking to negotiate termination or transfer and name change. If the developer agrees to the name change, losses can be reduced, but note that the name change may involve taxes and handling fees.

IV. Lawyer's Advice: Rational Rights Protection and Risk Prevention

Facing falling housing prices, the emotions of homebuyers are understandable, but legal rights protection should be rational. Our suggestion is:

1. **Comprehensively review the contract**: Check whether there are clauses such as "price protection" or "price drop compensation". If so, you can assert your rights based on the contract.

2. **Collect evidence**: Save all sales promotional materials, chat records, and payment receipts, especially content related to price commitments.

3. **Evaluate the cost of terminating the contract**: If you insist on terminating the lease, you need to calculate the penalty, tax losses, and potential litigation risks to avoid making a small sacrifice for a big loss.

4. **Focus on delivery quality**: If you choose to continue fulfilling the contract, you should closely monitor whether the housing delivery standards have been watered down. Once problems are discovered, promptly protect your rights through legal channels.

5. **Seek Professional Help**: Property price disputes involve complex contract and evidence issues, and it is advisable to consult a professional real estate lawyer. Guangdong Zhiming Law Firm has long-term experience in handling such cases and can provide contract review, negotiation, and litigation services.

Property price fluctuations are a matter of market principles, but the law is the bottom line for protecting rights and interests. Whether you are a homebuyer or a developer, giving more consideration to legal factors before making major decisions will reduce risks.