19 June 2005
Yan Jiasen, "New housing policy enacted: Market still vacillating!"
After the “new housing policy” appeared, related reports of all kinds became really lively. "Daily Economic News" recently reported that after publishing views that “apartment prices will fall 50 %,” well-known financial expert Yi Xianrong was warned by the higher authorities not to speak on the real estate bubble issue any more, because it was affecting policy formulation. Yi himself indicated he would not be accepting media interviews in the near future.
Who is Yi Xianrong? He is Director, Department of Financial Development,
Two years ago, relevant officials denied the existence of a real estate “bubble;” then at this year’s NPC meetings, Vice-Premier Zeng Peiyan made explicit reference to vigilance regarding “real estate bubble phenomena” in individual regions, connected to the issuing of a series of “new policies”, which may be the source of the influence on government high level decision-making of people like Yi Xianrong and others.
Having been carried out for half a month, is unclear whether the “new policies” have “brought down the fever” in the
On its appearance, the “new policy,” encountered both open and private skepticism and rebuff from some realtors. It is said, two big civil organisations in real estate business circles—the “China Urban Property Development Business Strategic Alliance” (Zhongcheng lianmeng) and the “Housing Industry Chamber of Commerce of the Association of Industry and Commerce” held a meeting to study countermeasures, appealing for the profession to save the market. Interestingly, in a forum not much related to real estate, Liang Xiaoqing, a Ministry of Construction official who was actually chairing the forum, unexpectedly got into a sharp debate with Feng Lun and Ren Zhiqiang over “What is required of the new policy for real estate.”
In such a situation, the statement of Xie Jiajin, chief economist the Ministry of Construction and concurrently Director of the Housing and Real Estate Industry Section was thought-provoking: the other day Director Xie told the media, at present the conditions certainly don’t exist for housing prices to fall greatly, the land sale price, compensation for relocation, building material cost and so on stays at a high level were some of the reasons, simultaneously, the government did not expect to see major rises or falls in house prices.
Director Xie explained the inability of house price to fall greatly in terms of “high costs.” In contrast, Pan Shiyi in an interview with Sinanet the other day Net actually confidently acknowledged, these two years real estate business has made the great money, with several hundred million made from carrying out a single project.
Aren’t big falls in housing prices advantageous to the common people? They fail to see the point of it: for those who have not yet bought a house but want to, there’s solid advantage in housing prices falling; but for the average person who has a house but uses it only to live in, price fluctuations actually have very little influence, because given that no transaction takes place, further rises in its price are imaginary numbers, and if they fall you still live there.
Some analysts point out, such statements by the Ministry of Construction show, faced by changes possibly appearing in the real estate market, the outlook of functional government departments mentality will waver: On the one hand, they hope to carry out their responsibility of enabling more middle and low income earners buy housing; On the other hand, they fear being attacked by the kingpin real estate industry, impacting on economical development and financial security. Originally, the common people, seeing the emergence of a quite vigorous and resolute “new real estate policy”, really expected housing prices to come down, and many resolved to hold on to their money, to wait and see and buy housing after they have done so, but now having heard all the above opinions they are a little frustrated and feel helpless.
19 June 2005
New housing policy
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