People's Daily: No excuses for steady growth and loose regulation

If we relax the regulation at this stage and revert to the old road of over-reliance on real estate to drive GDP, it may stimulate economic growth in the short-term, and in the long-term it will be tantamount to quenching thirst. Continuing such a development model will lead to a sluggish real economy, delayed adjustment of industrial structure, and long-term economic damage that is far greater than short-term pull.

Property market regulation is more difficult

The desire to relax control in some places is very strong, and the market is moving towards full recovery.

"The economy is so sluggish, it must rely on real estate to save the economy. Just like in the financial crisis of the past two years, real estate regulation can no longer be so severe."

"Did you not see that all regions are loosening control? It is estimated that the purchase restriction will not last long."

"We must pay close attention to buying a house and house prices have been rebounding. We may have to soar again next year."

......

Recently, people who sell homes in sales offices, second-hand housing agencies, and others will say the same to the vacillating buyers. For home buyers, the slowdown in economic growth - the relaxation of market regulation - the stabilization of the economy - skyrocketing housing prices, both in terms of experience and logic, seems to be convincing.

In the first half of this year, the property market saw a clear rebound in the slowdown in economic growth and the difficult profitability of many enterprises. According to data released by the National Bureau of Statistics, the sales prices of newly-built commercial housing in 25 cities in 70 large and medium-sized cities across the country rose in the chain in June, an increase of 19 from May. The trading volume of the first and second-tier cities in the real estate market hit a record high in May, and continued to pick up in July. Real estate ** rose for the first time after falling for the eighth consecutive quarter. These signals all indicate that the market is going towards full recovery.

In some places, under the pressure of steady growth, the desire to relax control is very strong. Since the beginning of this year, about 40 cities have introduced different degrees of fine-tuning policies for the regulation of the property market, and efforts have been further increased.

The rapid recovery of the market and the loosening of policies have gradually reflected the impact of changes in market expectations. The second-quarter depositors' questionnaire survey released by the central bank shows that in the next quarter, savers who wish to buy a house account for 15.7%, a record high in two years.

Zhu Zhongyi, vice president of the China Real Estate Association, believes that under the pressure of steady growth, the difficulties and obstacles faced by real estate regulation will increase. On the one hand, the regulation of the property market that lasted for more than two years does have some impact on economic growth. In particular, the impact on real estate investment and upstream and downstream industries is manifested in various aspects. Therefore, local governments have the desire and motivation to relax control. On the other hand, the current market information is confusing and homebuyers worry about the housing price rebound, coupled with the central bank’s continuous interest rate cuts, which reduces the burden on home buyers. Many home buyers who wait and see are speeding up to buy houses may have the tendency to reverse the trend of house prices.

“Currently at a critical period of real estate regulation, the situation is extremely serious and complex. Although the overall situation is still within the regulatory target range, market trends may deviate from the regulatory target as the pressure of market warming increases.” Dean, Institute of Financial Strategy, Chinese Academy of Social Sciences Gao Peiyong, head of the "Research on Housing Problems" group, said that under the background of a slowdown in economic growth, the range of options for currently modifiable market instruments has narrowed and real estate regulation will become increasingly difficult.

Reliance on the steady growth of the property market is no different from drinking thirst

Adhere to regulation and control can force local governments to focus on promoting the development of the real economy and optimizing the economic structure.

In fact, whether it is worried that regulation and control will hurt economic growth or whether local governments depend on what they develop, they are all based on the inertial mode of thinking that economic growth should rely heavily on the real estate industry. If you loosen the real estate control in order to stabilize growth, not only will there be a risk of a sharp rebound in housing prices, economic restructuring will also be hit hard.

Zhu Zhongyi believes that after several years of regulation and control, we have a more scientific understanding of the positioning of the real estate industry. In addition to the important driving forces for economic growth and related industries, real estate also has the important livelihood function of improving the housing conditions of ordinary residents and maintaining social harmony and stability. In particular, at this stage, it is necessary to maintain steady growth and maintain social stability. Some localities should change their understanding of the past and see more of the important role of adhering to regulation and control to promote the reasonable return of housing prices and improve people’s livelihood, and must not allow housing prices to rebound. Can not let the regulation appear repeatedly.

In the first half of the year, the investment in real estate development nationwide totaled 306.1 billion yuan, a nominal increase of 16.6% year-on-year, and the newly-started housing area was 9,238 million square meters, down 7.1% year-on-year. Although real estate regulation is indeed an important reason for the slowdown in economic growth in the first half of the year, it should also be viewed in a rational manner.

The relevant experts of the Development Research Center of the State Council believe that, under the circumstances of adhering to regulation and control, the decline in real estate investment growth is expected. This is also a reflection of the fact that the growth rate of real estate investment in China has begun to enter a normal correction cycle. It is expected that in the next few years, the new construction area, construction area and completed area peaks of urban residences in China will appear one after another. The fall in investment growth is also objective and normal, and it is unrealistic to expect real estate investment to maintain ultra-high growth.

“Any kind of real estate regulation and control policy aims to contain bubbles and prevent excessive impact on economic fluctuations, so as to avoid economic shocks caused by bubble collapse, at least not to harm the economy as the bottom line.” State Council Development Research Center Institute of Finance The director, Ba Shusong, said, "Real estate regulation itself is to reduce rather than increase economic fluctuations."

For some places, if we relax control at this stage and revert to the old road of over-reliance on real estate to drive GDP, it may stimulate economic growth in the short term, and in the long term it will be like drinking and quenching thirst.

During the “Eleventh Five-Year Plan” period, the total price of land transactions in the country totaled more than 7 trillion yuan; in 2010, the budgetary revenue of state-owned land use right transfer fees was only 1.24 trillion yuan, and the final final income reached 2.82 trillion yuan. 126.5%. It is impossible for such high land sales income to continue for a long time. Continuing such a development model will lead to a sluggish real economy, delayed adjustment of industrial structure, and long-term damage to the economy far more than short-term pull.

The above-mentioned experts from the Development Research Center of the State Council believe that the persistence of regulation and control can, to a certain extent, push the local government to focus on promoting the development of the real economy and optimizing the economic structure. Although the adjustment structure cannot be completed overnight, and it is bound to experience pain at the current stage, it is only by looking for new growth points that the economy can be promoted to develop healthier. To a certain extent, China's economic growth is expected to be reduced to 7.5% this year, which has left room for real estate regulation, reflecting the government's determination to adhere to the regulation of the property market and promote economic restructuring.

Finding the dilemma balance

If local policies are excessively loose and the risk of house price rebound increases, more stringent control measures may be introduced.

“The third quarter may be more tangled.” Zhu Zhongyi said that the economic growth rate in the first half of the year has “broken 8”, and the property market is rapidly picking up again. In the coming period, it is necessary to prevent the economy from falling further and insist on real estate regulation. It is not easy to relax and maintain social stability and find a balance between the two.

In the future, more attention should be paid to the combination of short-term control measures and long-term institutional construction. The combination of price control and stable expectations should be encouraged. The combination of just-needed and investment speculation should be encouraged. Commodity housing market regulation should be combined with the construction of affordable housing so that it is possible to ease the current situation. The dilemma faced by regulation and control.

Zhang Dawei, director of Beijing Zhongyuan Real Estate Market Research Department, believes that in the short-term, investment speculation needs to continue to be curbed, and efforts to limit the purchase of cities should not only be relaxed but should even be strengthened. On the basis of the previous single-city purchase restriction, it is necessary to explore the multi-city restriction of the nationwide housing information system.

At the same time, it is still necessary to support and encourage self-occupied demand, improve demand into the market, promote stable development of the market, avoid ups and downs, which is also conducive to the normal role of the real estate industry in promoting economic growth.

The role of social housing construction in regulating and stabilizing growth should not be ignored. Zhu Zhongyi stated that the construction of affordable housing should be steadily promoted, channels should be broadened, private capital should be encouraged to participate in construction, and the multiple functions of ensuring the welfare of the people, stabilizing house prices, expanding domestic demand, and promoting development should be fully utilized. In terms of demand management, it is necessary to continue to implement differentiated credit tax policies, resolutely curb speculative investment purchases, and speed up the promotion of real estate tax expansion pilots.

Over the past two years or so, the progress of the long-term mechanism reform is still not satisfactory. Zhu Zhongyi believes that relevant laws and regulations on the healthy operation of the real estate market and housing security should be established and improved as soon as possible; market mechanisms and institutional arrangements should be improved. In particular, on the basis of earnestly summing up the experience of pilot cities, they should be designed and established as soon as possible in line with China’s national conditions. A real estate tax system that helps curb speculation, encourage self-occupation, and improve demand.

“Mid- and long-term plans for housing construction should also be promptly introduced, which will help strengthen policy continuity, stabilize market expectations, and stabilize the market,” said Zhu Zhongyi.

In the past two months, the departments of the Ministry of Housing and Urban-Rural Development, the Ministry of Land and Resources, and other departments have repeatedly expressed their position, and they must insist that the measures related to real estate regulation are not relaxed. From the beginning of July, the State Council sent eight inspection teams to conduct special inspections on the implementation of control measures in 16 provinces and cities. The supervision focuses on the implementation of housing restriction measures, the implementation of differentiated credit tax policies, and the availability of housing land.

In the past two years or more since the real estate market was controlled, the State Council has repeatedly inspected the implementation of the regulatory policies. In contrast, the current inspections are particularly "high profile." People in the industry generally believe that high-profile inspections pass the determination of the central government to resist the pain and persist in the regulation of the property market. They are also relaying information to some places. They cannot relax control under the pretext of stabilizing growth pressure.

According to relevant persons from the Ministry of Housing and Urban-Rural Development, the results of the inspection will affect the direction of the next phase of the regulation and control policy. If local policies are excessively loose and the risk of house price rebound increases, more stringent measures may be introduced. For places where the control policies are ineffective and where the regulatory objectives have not been completed, the relevant departments will conduct interviews or even hold them accountable.