Insider: Real estate market recovery just wishful thinking

14:45, September 29, 2010      

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Regarding the "Notice on Further Strengthening the Management and Regulations of Real Estate Land and Construction" published by the Ministry of Land and Resources (MOLR) and the Ministry of Housing and Urban-Rural Development (MOHURD), Ren Zhiqiang, president of Huayuan Group, said on Sept. 28 that currently the real estate market has not recovered. Therefore, if effective measures are not taken such as enlarging land supply and financial control, it is impossible to solve China's urbanization and residential housing problems only through controlling the price of commercial residential housing.

"Regardless of how the golden September and October months will impact the market, it is certain that the housing sales volume will decline from the previous year," Ren said.

He believes that the results at the end of 2010 will not be more optimistic than last year, and the recovery of the real estate market is just a beautiful dream. Ren said that the continual rise of the stock of housing will cause great pressure on property developers, the market and the government at later stages.

Insiders believe that the second housing credit check by the MOHURD and China Banking Regulatory Commission (CBRC) and the "Notice on Further Strengthening the Management and Regulation of Real Estate Land and Construction" published by MOLR and MOHURD are great efforts taken by the central government to strengthen the regulation of real estate.

Ren believes that the reasons behind the current housing price problems are not directly related to the real estate market. He said that aggregate investment, credit scale, monetary aggregate, land monopoly and shortage, tax policies and loan interest rates are all factors outside commercial housing. He also noted that problems outside commercial housing cannot be resolved by adjusting prices of commercial residential houses.

After analyzing historical data, Ren concluded that the land used exclusively for commercial residential housing only accounts for nearly 2 percent of the total annual amount of occupied land. The proportion is too low and land supply for commercial residential housing is insufficient, which remains an obstacle for marketization.

Ren said in his blog that market adjustment and housing price stabilization should rely on increasing land supply and adopting interest rates and monetary policies rather than using other means to suppress consumption and improve demand, much less limiting prices and sales to distort housing prices.

By People's Daily Online


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