Official Says Home Price Drop Should Be Feared, Creates Firestorm

Hubei Vice Governor Cao Guangjing created an internet firestorm by writing the following:

We were concerned about rising real estate prices in the past, today should really worry about real estate prices falling. Once the bubble bursts, the foundation for bank loans will collapse, the consequences are serious, and even lead to the financial crisis, this is far more serious than a single company or even single industry crisis. "

Chinese citizens vehemently disagree. They want cheap housing:

Obviously, a lot of people are not interested in reading this long article, they just think prices should fall, and must be slashed. In the survey, seven in ten adults said they did not worry about falling house prices, because falling prices are "pro-people"; many people believe that inventory reduction means "lower prices, so that everyone can afford." If price drop a lot, that means household wealth has shrunk dramatically, what does "pro-people" mean? Are homeowners not the people? Moreover, if the current price to be reduced "so that everyone can afford," then at least you have to cut it in half, right?

iFeng: 官员担心房价下跌被猛批 媒体：讲了一句真话

China is moving inventory in cities with the biggest price increases because Chinese treat housing as investment, including as a speculative investment. If real estate doesn't have a casino atmosphere, the inventory won't move. A new speculative bubble, misallocation of resources and wealth inequality as money flows into cities that already have high home price to salary ratios.