People's Daily: Effect of Real Estate Slowdown on Economy Extremely Limited

A more measured "all is well" piece from the state media.

This year, as China gradually downward trend in the property market, was issued outside arguments about China's property market collapse, the real estate will be a drag on economic worries weak voice more and more. Experts believe that the property market entered a period of adjustment is rational return after experiencing 10-year high growth will be beneficial to China's economic structure adjustment to a higher quality of growth. Property markets will be a long process, prices will not appear cliff downwards, it will not have a significant impact on the Chinese economy.

Sparked concerns about weakness in the property market

With the contribution of the Chinese economy to the global economy is growing, China's economy every move triggered widespread concern outside world. Especially in the current Chinese economic growth continued to slow down in the background, the property market downturn is exacerbated by overseas concerns about China's economic downturn.

Chief economist at Citigroup Global William? Bout It appears that the global economic recovery still faces multiple risks, and a sharp slowdown in China's economic growth is one of them, mainly from two aspects: one is the credit bubble being squeezed, and the other is related to the construction and real estate activities significantly decline.

UBS Wealth Management, Chief Investment Officer, Asia Pacific, North Pu Yong Hao said that China Housing estate bubble has begun to burst, the current four-tier cities oversupply is very serious, first-tier cities housing prices high. Previously, the loss of real estate as stimulating economic policies biased main engine power into an economic drag on too anti-factor.

As for whether China's economic growth this year of 7.5% of the stated objectives completed, Citigroup chief economist for Greater China Shen Ming Gao said that there is a certain degree of difficulty, slow growth in domestic real estate investment on the one hand, on the other hand the high cost of domestic funds. At present, because the market is still worried about the cost of capital will rise again, but also worried about the speed of future interest rate market will push the cost of capital, so the lack of market confidence in the economy will lead to continued downward.

Little impact on the economy as a whole

Despite the current real estate market in China is not optimistic, sparked widespread concern, but for this to exaggerate the economic impact on the property market in China is still untenable views.

"Weak property market, prices fell GDP will certainly be affected, but the impact will not be much." Vice president of the China Real Estate Association keung told reporters that the central government would certainly take into account the impact on the economic development of the property market downturn brought so stressed by shantytowns, increased investment in affordable housing development efforts and other measures to hedge against the possible decline in the property market impact. For example, Beijing has increased the size of the protection of housing construction, the country as a whole is also true, but because of shantytowns and the proportion of affordable housing is not too high, and therefore may not be reflected in the hedging effect is very good.

"In China we see some real estate and local government debt risk, but on the other, the Chinese government has sufficient financial means to respond to crises that may arise." Peterson Institute for International Economics Adam? Posen said that the Chinese real estate market may not be the bubble, but the valuation is too high. As the Chinese people's leverage ratio is relatively low, the share of the assets they hold some developers are quite limited, so do not appear like Spain , Ireland and the United States where the economy so much destructive power.

"This year, the property market is destined to be the year for various reasons an adjustment, but if it follows that the impending collapse of the property market, there cliff downwards, this conclusion exaggerated." In the Ministry of Housing Policy Research Center, the main Renqin Hong opinion, the high base, low expectations , the impact of credit tightening has become the real estate market in 2014, the three main cause, but the total demand in the housing market in China is still a lot of space and healthy development of the market is still large.

Property also repeatedly hit new lows for the year

In fact, as a second-tier and fourth-tier property market differentiation, in varying degrees around the price adjustment, the impact on the economy is not exactly the same. Keung said the Guangzhou-Shenzhen and other cities northward, their industrial structure, industrial layout is relatively mature, the local sources of finance is relatively diversified economy better overall basis, the impact of the downturn on the local real estate turnover is not so obvious. Some small cities, rely on real estate is indeed obvious, or not affect the prosperity of the local property market is relatively large fiscal.

For some cities prices are still high, the housing market downturn will continue for some time, may occur repeatedly hit new lows in the process. "Weak in the first half of the property market turnover decline mainly reflected in the above, in the second half features may change, reflected in the price of loose." It seems that some local real estate prices could plunge in keung, by markdowns to stimulated volume recovery. If more housing prices taking to price change, market-based policies, coupled with a more relaxed compared to the first half of the credit policy, along with the volume picked up, prices bottom may soon emerge; But if market is still holding a wait and see attitude, housing prices do not take measures to return the funds, then the adjustment of the property market may be longer.

"We are on the current and medium-term real estate market still has faith." Qin Hong said that the future of the city [ News Price apartment Review ] Town of development, economic growth and stability upgrade consumption structure will provide space for the real estate market. The future development will focus on the past simple increase in the number, turned more attention to quality improvement.

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