Business / Industries

Real estate sector needs self-regulation

(chinadaily.com.cn) Updated: 2014-07-18 14:22

Yang: Housing prices rebounded significantly in 2008 because of the government's "4 Trillion Yuan Economic Stimulus" program (enlarge the investment of indemnificatory housing). But the government didn't implement such things this time; people are talking about new situations. What do you think the government should do?

Mao: 10 years ago, the rapid increase in housing prices gave rise to unbalanced and unfair resource allocation. So the government released a series of measures and wanted to regulate and quickly manage the situation.

But this brought another problem. It is like a person taking medicine everyday to take care of health and finally gets an endocrine disorder. And you don't know which part of your body went wrong. You can't always depend on "medicine"; it has covered the real market condition and brought unbalanced investment.

The government should keep providing money to stimulate economy, or say "farewell" to the past practice? If they didn't adjust the economic structure, the market wouldn't move forward. But once the government intervenes, the real estate market starts feeling uncomfortable.

The adjustment came this time when the government did not issue any policy but only fine-tuning its policy on banks. This move was not directed against the real estate market but was aimed at adjusting the economic structure.

Yang: Situations in different cities are different and situations in different real estate enterprises are different. Actually social mentalities are also dividing, along with different reactions in different positions.

Mao: Because when a person has too many private properties, he cannot afford to lose. When he owns a house, he is concerned whether the value of the property will depreciate. When he holds cash, he is worried about devaluation too. So he is always going back and forth between property and cash.

I found that more properties a person holds, the more worried that person is. They are very afraid of their properties losing their value.

Yang: We have seen and heard many so-called hovers and hesitations. What do you think we should do to bring a positive change into our economic structure?

Mao: The real estate market ought to learn to self-regulate and get used to market forces balancing the sector. The transition period is always tough. Real estate developers may face a tough time.

People too should adjust themselves mentally. They need one or two years to decide this question of whether to buy or not to buy. After digesting the things that are not well digested and balancing the things that are unbalanced, the market will find a balance naturally.

 

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