I think it is rather balanced, actually. Dark Elves may get Skilled Magic for free, but they have to pay for everything else. You could amass cheap units with Skilled Magic, but they would have weak armor and slow movement.
Every race has its advantage that adds up to 20 gold worth of traits. I went through it several times, and I truly think it is balanced and not ridiculous at all.
I disagree. Here's a short game theory analysis of the advantages. and yes, I know that people don't necessarily want to maximize their assets, but that's not a reason in my opinion to provide vastly unbalanced systems.
High Men: Pikes/Polearms are 0 gold. Plate Armor is 8 gold. Combatant Mounts are 4 gold.
So. You can get free pikes. IF you want heavy armor, which is not for all units, then it's cheaper. IF you want heavy cavalry, it's cheaper. If you want some archers, includign ligth cavalry, they get zero bonus. This is basically good to build paladins, but very specialised and not versatile. Rather weak.
Barbarians: Leather and Shield are 0 gold. Swords and Axes/Heavy Weapons are 0 gold.
Means all units can have leather, shield, sword. It won't help heavily armored units or ranged units, but swords as a backup for archers is nifty. Most units, but not all, will benefit from it. Strong.
High Elves: Skilled Magic is 8 gold. Longbows are 0 gold.
For skilled magic units, this is nice if you wanted a magic-strong unit. Longbows are useful only for archers, but you could double all your melee units as archers. Average.
Dark Elves: Skilled Magic is 0 gold.
Absolutely all units but elite magic units will get that. All of them with no exception. Overpowered, since ALL units get a 20 gold discount. Compare to high man archers and laugh.
Dwarves: Axes/Heavy Weapons are 0 gold. Plate Armor is 4 gold.
A bit like high men. Weak.
Goblins: Crossbows are 0 gold. Leather and Shield are 0 gold. Short Swords and Spears are 0 gold.
To benefit from all of these, you need to mass a lot of crappy traits on a single unit. Not overwhelming, but versatile enough. Average.
Halflings: Netheryl is 20 gold.
Compare to dark elves and weep. You'd have to pay a lot in order to get a good armor. You can't have good cheap troops, contrary to, well, almost every other race.
Orcs: Flying Combatants are 16 gold. Chainmail is 4 gold.
So specialised that it's mostly useless. The Chainmail 4 is nice, but the flying combatant is too expensive to be used on all units, so most of the gains will be used on only 1 unit out of 3 possible designs.
Gnolls: Combatant Mounts are 0 gold. Axes/Heavy Weapons are 0 gold.
All units will be mounted on wolves, which is fun but a bit exaggerated. Axes are nice btu not all units would use them. Strong.
Beastmen: Noncombatant Mounts are 0 gold. Skilled Magic is 8 gold.
Centaurs everywhere. Why would you design a minotaur when you can have a free mount? See high elves.
I'd propose a system where the TOTAL advantages gained from the race choice for ALL the designs is 60 gold (probably less), and these must be picked from a list that can gain advantages.
This is because any dark elf palyer will get a 60 gold discount overall for his 3 units, while an orc player designing an archer, an infantry and a cavalry will likely get at most a 24 gold or 28 discount, and therefore be screwed badly, despite remaining totally in-character.
EDIT: If magic require mana to acquire/maintain, what about the bonus? Do dark elves pay 0 mana and 0 maintenance in addition to 0 gold, or 20 mana and 10 mana upkeep in addition to 0 gold?