By Jiang Xiyu
Translated by Mao Enlei
On July 27th, many newspapers published the report by Xinhua News Agency, entitled 'a great number of real estate enterprises closed quickly or confronted a new round of market adjustment'. The story was based on a recent operation to cancel the business qualification of 473 real estate enterprises in Beijing. Further investigation in experts, employers and intermediary agent employees didn't reach any obvious conclusion that the house price will fall. Anyway it did imply a price drop in Year of the Dragon. Chinese version>>
Beijing News quoted the same article as its headline news on page 9. However, they 'took a clear-cut stand' by adding a related article, 'the close of real estate companies on large scale doesn't necessarily mean a price fall', on page 2. It pointed out the property market is quite different from other markets due to the policy interference. With favorable condition, house price soars, while with looser policy, the market tends to shrink, and consequently overheating prices will cool down (as a matter of fact the growth rate of the house price suppressed instead of the house price).
'Depriving the business qualification of developers does not mean enterprises will withdraw from this market', they added. ...as price goes up, capitals pour in; therefore, it is easy to be understood that some enterprises without any real transaction are closed by the government. Capitals are withdrawn when government imposes more strict measures on the property market so that the idling real estate is cancelled. When it comes to the opposite condition, enterprises soon turn back as the price bounces back. Besides, it's easy for enterprises to renovate then open again. Rush forward, and break up in a hubbub, which is an inherent feature of capitals. A similar scenario happened before during the previous session of the regulation and control in property market. It's too early to assert that the house price will turn into descending trend follow the rapid close.
Thus,'it is more reasonable to pray for a continuous regulation of house market than of a substantial price fall alone', said Beijing News.
Though it seems that Beijing News shares a different opinion, they ultimately reach the same conclusion. According to Xinhua News Agency, more and more real estate companies are closing down, which predicts the drop of house price as a trend this year. This relies much on a consistent tight policy. That's the reason they inserts an 'OR' in the title 'a great number of real estate enterprises closed quickly or confronted a new round of market adjustment'. According to Beijing News, it is more reasonable to pray for a continuous regulation on house market than on a substantial price fall alone. They focused on the policy background, aiming to warn those who are concerned: the policy will never shake, nor will it be affected. So there's no reason that the house price fall will follow the rapid close.
The warning is really in time, yet it's still a long-term job to reach the goal of 'reasonable decrease in house prices' imposed by the central government. The best strategy might be to wait and see since there's no certainty that the house price will fall as a trend this year.
It's still unknown whether the price will fall or not this year, but it will definitely fall with consistent control policy. That's not a personal version. Once you've seen the editorials from both of the two, you will accept this conclusion.