Xiang Songzuo: Real Estate Could Sink into Crisis

Xiang Songzuo,Deputy Director and Senior Fellow at Renmin University's Center for International Monetary Research says real estate could sink into a crisis. He gives an example of a villa in Wenzhou that sold for ￥98 million and is now priced at ￥30 million and will likely continue to fall in price. He says a survey showed that 52% of homes purchased in Beijing since 2009 were purchased for investment. He said many companies could go bankrupt during the adjustment period.

向松祚：房地产市场或陷入泡沫危机

"Wenzhou when a house is 98 million maximum, now down to 30 million, estimate that it will fall." Macroeconomists, deputy director of the International Monetary Institute, Renmin University of China to the song Jo [ Microblogging] recently said that the national average house prices are falling, and some places even more intense adjustment "I am particularly worried about Chinese real estate will fall on Japan 1990s bubble crisis of bankruptcy."

　　"China Communication University of Phoenix School of Communication and Management Division Secretary Seminar" was held at the opening ceremony of the Communication University of China May 31-June 1, Jo was invited to the song as "the era of big turning point of China's economy," expressed his keynote report concerns about the current status of the real estate.

　　National Bureau of Statistics released the latest data show that in April of commercial housing sales area decreased by 6.9%, sales fell 7.8%. Jo to the song that "from this figure which can obviously see greater sales than the decrease in the sales area, only indicate a problem, the national average price is on the decline.."

　　Further pointed out to the song Jo, according to the data, the decline in real estate sales also weighed on consumption growth, and real estate-related expenses such as building materials sales year on year growth fell from nearly 25% last year to 12% in December, Furniture sales up the growth rate declined from 20 percent in December last year to 11.8%. Figure dropped significantly, showing a real demand for housing in previous years has been almost overdraft, or that has slowed dramatically, many people bought homes not to live. This situation is most typical in Beijing, there are research institutions conducted a survey in 2009 after Beijing to buy 52% of commercial housing is not for self-occupation, for investment.


　　Jo to the song that China's real estate has seen three very prominent feature, the first is the total surplus. According to the plan, to be completed by 2030 China's urbanization rate of 70%, meaning that one billion people live in cities and towns. According to a well-off living area per year planning community is 30 sq m, which is 30 billion square meters. China's urban housing area but well past the 30 billion square meters.

　　The second feature is market differentiation, four-tier cities have begun a serious slow-moving, a lot of people to sell local house, went to Beijing and Tianjin, the northeast coastal cities to buy a house.

　　The third feature, the real estate business in general debt ratio is too high, unsustainable. 142 real estate companies listed on the debt ratio over 70% on average, half of the debt ratio over 80%.

　　Song Zuo said that 60% of the real estate industry and the closely related; all bank loans, 60% of direct and indirect land for housing and mortgages; residents of the property 60% for people to buy a house. China's real estate these years the Chinese economy has a very big contribution to improving the living conditions of the residents. The current problem is that previously did not eat, hungry, and finally Mengchi eat into hypertension. But he also stressed that the price adjustment does not mean that prices will not rise because of the economic cycle is not a one-way operation, it is possible to adjust the 5 years, 10 years, 15 years, and then jumped. "But this can be very painful adjustment period, many companies will go bankrupt."