High First-Tier Home Prices Are A Warning Sign

Amid the optimism about rebounding home prices comes this warning.

In fact, there are several noteworthy phenomenon. First half real income growth was 7.6%, significantly lower than the growth rate of house prices; the second is the first half national GDP growth rate of 7%, far lower than the actual growth rate of home prices; third, in the first half the hundred cities land transfer totaled 702.1 billion yuan, down 35.5 percent; wherein land transfer in Beijing and other 10 major cities nationwide totaled 254.98 billion yuan, down 47.5 percent, both the quantity and the selling price of land has not increased significantly year on year. These data suggest the home price rise lacks of economic support. Thus, Bejiing-Shanghai-Guangzhou-Shenzhen and other cities housing prices rising too fast is not unrelated with developers and investment speculators colluding to lift them.

On the surface, it seems there's no connection between first-tier city home prices and second- and third-tier cities, some people will even throw out that Changsha has seen prices decline for three straight years. However, a deeper investigation is worrisome. One, rising housing prices will exacerbate the impulse to sell land, resulting in excessive waste of land resources, so that the industrial economic adjustment will be more difficult in these areas, the economic restructuring will be prolonged, leading them to rely on local land finance while ignoring the real economy. Two, it will make a number of second- and third-tier capital cities imitate the first-tier cities, the development of the real estate economy will generate the old idea of quick money, developers and investors caught unconsciously in the trap of keep housing prices stable and strong, this approach may also lead to investment and speculation funds to re-enter the property market, so that the real economy suffers even more "blood loss." For example, since June, Xi'an, Lanzhou, Qinghai, Henan and other places have taken to improve mortgage funding, allowing buyers to make lower down payments, reducing the deed tax and giving financial incentives to settle, these concessions and bailout measures stimulate and activate the property market in order to achieve stable high prices.

In addition, Beijing-Shanghai-Guangzhou-Shenzhen and other cities housing prices will mislead the central government, so that decision-makers mistakenly believe that the real estate market will become more healthy, and now give the right incentives might act as if they've "skillfully deflected the problem" positive effect. In particular, it may shift the center of economic policy focus, mistakenly believe that economic restructuring and development, and strategic structural adjustment and development of real estate economy, are not contradictory, so that the previous years real estate regulation efforts will all be flushed down the drain.

In this regard, I believe that the emergence of housing prices is not terrible, terrible is the face of rising house prices miscalculated the economic situation of macroeconomic decision-making; housing prices appear not to fear, fear the place will be caught in land depend not escape; house prices rise not worry, you can worry is afraid to stabilize prices in the right way and do not want to develop the real economy.

For now, governments at all levels have a ton output capacity of courage and determination, mind to come to regulate the development of the real estate market, housing prices artificially high profits too effective abatement bring many hazards, long-term thinking in order to serve the development of the real economy, carefully plan The steady development of the real economy. Only in this way can promote the healthy development of China's economic transformation and upgrading.

iFeng: 几大现象证明:一线城市房价高是危险信号

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