People's Daily: Supply and Demand Fully Relaxed, Market Will Take Over

People's Daily published an article stating that where supply & demand was tight everywhere in 2011, and localities excessively tight. Now supply & demand is relaxed, with some localities seeing excessive supply. Before, lack of supply was a problem, now excess supply is a structural problem. The structure is demographic and geographic, excessive supply in a market segment (such as excess luxury homes in Baodi) or in a city. The solution is not government intervention, rather the exiting of government and the flowering of market regulation.

"Using the market to regulate the market problem is the next important step. In the next phase, the government will be inclined to use finance and tax, these types of marketization tools, and administrative methods will be used less and less." Deputy Minister of Housing and Urban-Rural Development Qi Ji said.


 After the real estate market a few years ago the fiery development, has now rendered the supply situation easing. Housing and Construction Ministry of Urban Policy Research Center main Renqin Hong Recently introduced in 2011 after the Chinese property market supply and demand relationship has changed from the previous "overall tight, local tight," has evolved into "Overall partial song, local excess" . Insiders pointed out that the current property market is experiencing two major trends, one housing prices increase to the inventory, and the other is the gradual regulation to the Chief.

Market supply exceeds sales
A few years ago the country interested in real estate development, and now, the property market supply rate has been faster than sales pace, while housing stock has quietly doubled. Qin Hong said in the past, the domestic supply and demand in the property market is tight, but over the past two years, the domestic property market supply growth rate faster than sales, it has been an oversupply in some areas.
Statistics show that as of the end of August this year, an area of ​​561.6 million square meters of commercial housing for sale, with the lows (March 2012 national real estate for sale in an area of ​​301.22 million square meters) compared to an increase of 86.4%. Over the past two years, the national housing stock almost doubled. Compared to mid-2010, the last four years, the national housing stock increased by about 190%.
According to the Shanghai E-House Real Estate Institute of monitoring, as the end of August, the National Urban new commodity total housing stock 35 for 269.31 million square meters, growth of 1.3%, an increase of 22.6%. 35 new homes to the city of period 17.5 months.
"In recent years the market supply increased rapidly, mainly caused by three reasons. First, in response to the financial crisis, the 2008 domestic release large amounts of liquidity, but because of sluggish real economy, a lot of money, directly or indirectly, into the real estate field . "Qin Hong said.
Qin Hong analysis, and secondly, January 26, 2011, China's property market regulation introduced a "new national eight", wielding restriction and limited credit policy, and makes more than 40 cities across the country to carry out the purchase. Affected by this, in the form of investment in real estate has changed, the transition from the direct purchase of real estate to buy real estate trusts. These funds also into real estate development and investment fields, as the supply of funds. Third, starting in 2011, the local government reliance on land finance has improved significantly, land transfer speed, makes the growth rate of the supply side quickly.
Currently there is a structural problem
Although adequate market supply, but there are still structural problems. "China's real estate market will become increasingly apparent structural problems in the future. Before insufficient supply, now is a structural problem." Qin Hong said.
Qin Hong said, "structural" is reflected in two aspects, one population structure, housing unevenly distributed among different people; the second is the urban structure, market quite different forms in different cities.
On the one hand is oversupply, "the overall market oversupply situation has been established." Centaline chief analyst Zhang Dawei said in the past two or three years, China's real estate market supply and demand occurs completely reversed. "Empty" appears more "ghost town" indicates, "to stock" will become a problem in many places.
He also pointed out that cities demand fundamentals have not changed; in the second and third tier cities and a lot of four-tier cities, the oversupply situation is obvious.
The other is to improve the type and just need to have not been met. It is understood that more than 80% of China's real estate market demand for owner-occupied, which needs to improve dominant. National 24-28-year-old man marriageable population of 130 million, 80 million in urban areas, 50 million in the city. Urbanization rate increase will bring new demand for housing.
Future regulation to the Chief
In the past, to curb soaring housing prices, the country has introduced restriction policy, and now, the real estate market cooling, most of the city adjust the restriction measures, in addition, the PBOC and the CBRC also adjust the credit limit policies.
Deputy director of the Committee of Experts on the building housing the Ministry of Housing Policy Gu Yunchang that in the past ten years of market regulation is always staring at the prices, that the price regulation can be controlled by administrative means. But the practice has proved that with the purchase of credit limit approach might at some stage have played a role, but often the signal distort markets, and will effectively improve the type of demand, even rigid curb demand, is not conducive to economic development.
Recently, the purchase of the property market over the successive deregulation policy is the local government market regulation "to the Chief", market regulation is shifting from a policy-oriented as to the supply and demand-driven. Deputy Minister of Housing and Urban-Rural Development Qi Ji said that the recent real estate market policies primarily by market adjustment of the window period, the number of administrative interventions color more concentrated as possible removed.
"Regulated market with a market means the problem will be the main direction and means the next control. Coming period, the government will be more inclined to use financial, taxation and other market measures, and the Chief of the means to believe less and less. "Housing and Urban-Rural Development Ministry spokesman, said Nihong.
Experts suggested that the real estate market to the administration of the process, should gradually improve the relevant reform measures to establish long-term mechanism of real estate regulation. Eventually, the law of conduction through the market, to adjust the market structure purposes.


  1. Sorry for the off topic comment, but have found your site to be very handy in the past and noticed the RSS feed doesn't appear to have updated since late October making it difficult to keep track of your posts through RSS readers such as Feedly. Did you turn off RSS in the sites settings and if so are you able to re-enable it?

  2. Looks like it's an issue with Google. I'll keep an eye on it.