2015-01-26

Liu Shijing: China's Real Estate Turn Is Not Cyclical

Background on Liu Shijin.

China needs two to three years for the economy to bottom from the time when investment bottoms. A soft or hard landing in real estate is possible based on international experience.
刘世锦:住宅需求峰值已达到 房地产处历史拐点
Deputy director of the Development Research Center of the State Council in Beijing, said Liu Shijin on the 24th, the current Chinese real estate is not cyclical, but are at a historic turning point.

Liu Shijin in the sixth China Economic Outlook Forum sponsored by the China Economic Times made the above remarks.

Recently, some real estate experts, including many influential people believe that China's real estate market is cyclical current estimated price of real estate in September 2015 at the line, but Liu Shijin do not agree.

In Liu Shijin view, China's real estate market is at a historical turning point. "History of urban residential peak demand is 1.2 - 1.3 million units, this figure has reached 2014, after reaching there will gradually go flat, gradual downward trend, so our view is very clear, China's real estate is in historic turning point. "Liu Shijin said.

For the trend of prices, Liu Shijin that from the whole country, there will be a certain level of overall prices down, but the price will be significant changes in the regional characteristics.

For example, he said, even the United States more than a dozen states have offices in Beijing, we can understand why the Beijing housing prices down get down. But now, many places are like Erdos (8.67, -0.08, -0.91%) like a ghost town, the local prices and Beijing is certainly not the same, so the rate change has obvious regional characteristics.

Decline in real estate, in the end is the short term rapid fall in the end, or the gradual decline in the fluctuations? Liu Shijin reminder, this thing is now not sure, from the international experience, both of which are, in the end is how Chinese form, you also need attention.

Liu Shijin that now infrastructure and export growth which two "Boots" has landed, real estate investment has retreated, after bottoming only other real estate investment, high investment will be bottoming out, the high growth of the Chinese economy will bottoming bottoming one to two years estimated time, no more than three years.

National Bureau of Statistics latest figures show that in 2014 China's real estate development and investment fell 9.3 percentage points more than in 2013, real estate sales fell 7.6 percent, commercial housing sales fell 6.3%, real estate for sale in the area increased by about 129 million square meters more than at the end of 2013.

He also said: Interest cuts weak in stimulating China's real economy

"Considering the overcapacity in many industries, interest cuts may cause huge capital flow into stock markets other than supporting real economy," said Liu Shijin, deputy head of the Development Research Center of the State Council, China's cabinet.

He said the deflation risk in China comes from shrinking demands and excessive production instead of insufficient money supply, which is totally different from the cases in mature markets like the United States.

"Stimulus is not opposite to reforms," he said. "China's current fiscal policies are effective in improving demands through increasing infrastructure investment."

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