1. LINE

      Text:AAAPrint
      Economy

      Developers must cut prices to save market

      1
      2015-04-01 11:23chinadaily.com.cn Editor: Si Huan

      Where is the property market headed after one year of cooling and the ensuing six months of policy loosening? Will the market recover as expected?

      The adjustments in the property market have just started, and we (at the Chinese Academy of Governance) estimate the process to last five to six years. After developing at a fast pace for 15 years, it is normal for a property market to see a low run for five to six years, and no policies can change this trend.

      The regional discrepancy in China's property market is clear: the eastern region witnessed a rebound while the central and western regions slowed down further. Housing investment jumped 11.4 percent year-on-year in the coastal region, or 1 percentage point higher than in 2014, but only 6.7 percent in the central and 11.1 percent in the western regions — a drop of 1.8 and 1.7 percentage points from the average rate of 2014.

      Investment growth, especially in the coastal region, seems to signal that the housing market is on way to stabilizing. But the view will be different when we see it from the data of housing sales — by floor area and by volume. Data on the growth in supply and demand show an asymmetric feature in property adjustments: The drop in investment growth slowed whereas the slump in sales accelerated. What does this mean for the housing market?

      Behind this asymmetry hides a huge risk. Real estate demand continues to fall, but developers refuse to act correspondingly. That is against market rules. But why do they keep supplying amid such weak demand? That's a question we need to ponder.

      There are two reasons for that. First, real estate developers have got the strong support of local governments. Since the end of last year the central bank has been easing the monetary policy by lowering the reserve requirement ratio and interest rate. On March 30, it also cut the minimum down payment for the purchase of a second house from 60 percent to 40 percent. For developers, this is a strong bailout signal by the central government, so they are confident enough to increase their investment that's against market forces.

      Second, developers have long been spoiled by a surging housing market. They believe, no matter how wrong it is, that housing prices will keep rising and this momentum will never end, because the country's urbanization is far from over. As such, they think the property market will maintain its bull run amid the accelerating urbanization drive.

      The asymmetric adjustment between demand and supply means more houses will be built but fewer can be sold. That will lead to increasingly higher stocks than the market can handle. The longer such a situation persists, the greater will be the risks to the real estate and financing markets.

      Therefore, local governments have to pull the brakes on the "bailout" policy by encouraging developers to reduce housing prices in order to boost demand, while curbing investment as a synchronized adjustment to cut supply. This will speed up the process for the market to clear the stocks.

      While trying to salvage the housing market, we cannot rely on an anti-market force to buck the trend. When demand weakens amid adjustments, we have to act on price and supply. Once housing prices drop, demand will rise. Stabilizing the price and investment will only lead to an increasingly shrinking demand, hindering the economic cycle and stagnating the real estate market amid the lack of capital liquidity.

      There's nothing to fear when housing prices and investment drop because of adjustments. It is just a process to squeeze out bubbles and prevent financial risks. And the long-term existence of real estate bubbles can block industrial upgrading, expand the income gap and impede urbanization. Good news will come along with such adjustments. For instance, it will help boost the urbanization drive, narrow people's income gap and propel the development of the real economy. In particular, it will help more funds and resources to flow into industrial upgrading and for innovations.

      The author Wang Xiaoguang is a researcher at and vice-director of the Department of Policymaking Consultation of the Chinese Academy of Governance.

      Related news

      MorePhoto

      Most popular in 24h

      MoreTop news

      MoreVideo

      News
      Politics
      Business
      Society
      Culture
      Military
      Sci-tech
      Entertainment
      Sports
      Odd
      Features
      Biz
      Economy
      Travel
      Travel News
      Travel Types
      Events
      Food
      Hotel
      Bar & Club
      Architecture
      Gallery
      Photo
      CNS Photo
      Video
      Video
      Learning Chinese
      Learn About China
      Social Chinese
      Business Chinese
      Buzz Words
      Bilingual
      Resources
      ECNS Wire
      Special Coverage
      Infographics
      Voices
      LINE
      Back to top Links | About Us | Jobs | Contact Us | Privacy Policy
      Copyright ©1999-2018 Chinanews.com. All rights reserved.
      Reproduction in whole or in part without permission is prohibited.
      主站蜘蛛池模板: 秋霞人成在线观看免费视频| 亚洲av无码兔费综合| 国产亚洲精品免费视频播放| 亚洲AV日韩精品久久久久久久| 二级毛片免费观看全程| 亚洲v国产v天堂a无码久久| 老妇激情毛片免费| 国产乱色精品成人免费视频| 青草久久精品亚洲综合专区| 又粗又黄又猛又爽大片免费| 美女黄网站人色视频免费| 日产国产精品亚洲系列| 成人午夜影视全部免费看| 国产午夜亚洲不卡| 免费成人高清在线视频| 久久久无码精品亚洲日韩蜜臀浪潮| 久久精品无码专区免费青青| 在线观看亚洲人成网站| 九九精品免费视频| 亚洲国产精品嫩草影院| 精品国产亚洲男女在线线电影 | 皇色在线视频免费网站| 日韩亚洲不卡在线视频中文字幕在线观看 | eeuss影院免费直达入口| 亚洲av永久无码精品秋霞电影影院| 免费在线观看一级片| 亚洲午夜精品国产电影在线观看| 日本精品人妻无码免费大全| 国产在亚洲线视频观看| 国产啪亚洲国产精品无码| 最近在线2018视频免费观看| 亚洲色无码国产精品网站可下载| 亚洲国产一区视频| 日本高清高色视频免费| 亚洲性色AV日韩在线观看| 亚洲综合色成在线播放| 亚洲电影在线免费观看| 鲁死你资源站亚洲av| 亚洲国产精品自在在线观看| 成人性生免费视频| 国产一区二区免费|