Annual Report on Development of Housing Market in China (2010-2011) Release Conference

Publish Date：2014-04-29 15:23:41

Publish Date: 2014-02-26 15:15:15

The Green Book of Housing Market release conference & 2010-2011 Housing Situation and Policies Seminar, co-sponsored by Institute of Finance and Trade Economics Chinese Academy of Social Sciences and Social Sciences Academy Press (China), was held in Beijing on Nov. 16, 2009. At the conference, the second green book of housing market Annual Report on Development of Housing Market in China (2009-2010), completed by the Urban and Real Estate Economic Research Office of CASS Institute of Finance and Trade Economics and CASS Research Center for City and Competitiveness, was officially released.

Green Book of Housing Market, comprehensively applying theories of microeconomics, macroeconomics, public economics etc., has established a housing analysis framework, which is centered with housing market, supported by housing market players, based on housing macro-background and guaranteed by public policies. The book analyzes the housing market operation status in China from 2009 to 2010, and predicts the development tendency of China’s housing market and its major problems and challenges in 2011. Meanwhile, it also makes policy suggestions on how to promote the healthy development of China’s housing market.

Green Book of Housing Market proposes a multi-indicator index system in order to measure the quality, risk, efficiency etc. of China’s housing market. The system includes eight index: listed housing corporations index, housing affordability index, housing loans risk index, housing price bubble Index, housing financial institutions risk index, housing provident fund center housing risk index, housing market regulation index, housing social security index etc, which would reasonably assess the healthiness and rationalization of housing market’s critical aspects. The index system shows that the listed housing corporations have polarized income, yet gap between their profit percentages is narrow; most of the cities decrease in the housing affordability; the total credit of real estate enterprises tends to decline, but it still takes a high proportion of capital source, which leads to an increasing capital pressure risk; the average bubble level of housing price is high and that of some cities is excessively high; the proportion of commercial bank loan in real estate loans has increased, so does the liquidity risk of provident fund center, and some cities have excessively high risk of liquidity risk, which will result in income risk worrying; the housing regulation of Beijing is far stricter than others, and the housing market regulation of central cities is of a level higher than others; the housing security has been intensified and the security level differs in different cities.

Green Book of Housing Market presents China’s housing market and its relevant economy, finance and policies from 2009 to 2010 as below: varying paces of global economy recovery leads to different situations in global housing market; the basic of economy recovery has been constantly consolidated and the economy has maintained a rapid growth by housing regulation, but the inflation was aggravated; urbanization has become a continuous driving force for the economy growth, and the amount of housing supply and demand and the housing structure are prominently contradictory; the business environment has got tightened from loose and the expectation of real estate enterprises has differentiated; home purchasers tend to take watch-and-wait attitude and tenants are under increasingly heavy pressure, which contributes to a dilemma of both housing purchasing and renting; the credit support is gradually tightening and the trust fund is developing rapidly, yet the provident fund center should improve its operation efficiency; the housing price has been soaring from the beginning of 2009 to April of 2010, and after that the price rising slowed down, but the price was still high and the sales volume declined, which led to a continued stalemate of competition between policies and the housing market; the land supply has been enlarged and the commercial housing land decreased in ratio, resulting in the decline of land grant fee; credit is still in the monopoly pattern and the restructuring needs to be consolidated; the regulation has been reinforced and the executive force should be enhanced; the security has been intensified and the public rental housing became the new main force; the new regulation policies have been frequently introduced and the measures have been made gradually, with increasingly detailed content and accumulatively intensified strength.

Green Book of Housing Market predicts that: in 2011, the global economic growth will still have a long way to go and the global housing market will become more complicate; the economy will constantly revive in China, the impact of housing investment on economy will be weakened, the inflation pressure will become increasingly heavy, and the uncertainty brought by the global economic imbalance and the incongruity of different countries’ response measures will be also accumulated; the urbanization scale and structure will undergo a profound adjustment; the disparities of land supply and demand amount and the structure conflict will be alleviated, and the proportion of security housing in particular will be prominently increased. Overall, the housing market in 2010 will be stabilized with a slightly fluctuated decline. The reasons are as follows: the central housing policies of regulation and control and the macro-economy regulation policies have the same orientation, the housing regulation attitude and willingness are firm and resolute, and the housing tactics of cutting down the poppies are adopted; the investment in security housing is increasing and the housing security has been intensified significantly; the housing speculation is inhibited and the housing consumer expectation tends to scatter; the inflated monetary policies have caused increasing pressure on real estate development credit funds and the constraints of personal mortgage loan tend to be tightened.

Green Book of Housing Market indicates that the severe challenges confronted with housing market are: the macro investment growth is slowed down, the income distribution gap has been widened and the inflation pressure has increased; the urbanization pattern is extensive, and consequently, social and economic problems are accumulated; the housing enterprises are insufficient in internal control management and their credit standing and respectability need further improvement; the housing consumption policies lack constancy, and both the renting and purchasing ability of residents are deficient; the housing enterprises rely heavily on credit, so the provident fund center is accumulating risks; the difficulty of commercial housing supply expansion leads to the increasing demands; the middle-end and low-end housing land supply is insufficient and the land fund raising encourages the rising of land price; the differentiated credit policies need to be strengthened and the financial channel of security housing needs to be widened; the market regulation should be improved and the responsibilities need clear definition; the goals and responsibilities of security housing still need clarification, for the funds cannot be guaranteed; the implementation of regulation policies needs strengthening and the expectation management is severely insufficient.

Green Book of Housing Market points out that the primary mission of housing market regulation in 2011 is to facilitate the stable development of macro-economy and housing market. To be specific, we should guaranteed the healthy and steady development of macro-economy and meanwhile prevent the inflation from further aggravation; we should enlarge housing investment, increase housing supply, inhibit speculation demands, satisfy the consumption needs and extend the security needs. In order to accomplish the mission above, the policy in 2011 should target to ensure the constant growth of investment, the steady increase in sales and the rational return of housing price.

Green Book of Housing Market proposes the institutional measures of housing market regulation, and they are: moderately tighten the monetary policies, continue the positive financial policies, inhibit the inflation and adjust the structure; improve the urbanization quality and push forward the transformation of urbanization; strengthen the endogenous development ability of housing enterprises and increase the product added value; stabilize the housing consumption policy orientation and avoid aimless policy preference; enrich the investment channel of housing institutions, adjust fund-raising structure and enhance risk management; guide the housing demands and enlarge the housing supply; optimize the structure of land supply and strengthen the effectiveness of composite policies; complete the market system, enrich the financial products and strengthen the structural regulation; improve the supervision efficiency and enhance the industry self-discipline; reinforce the financial support, implement the entity responsibility and boost effective security.

Green Book of Housing Market has made in-depth monographic study on series of major practical issues which are confronted by current China’s housing market and drawn a series of valuable conclusions. The major practical issues include: the security housing investment and macro economy growth, the financial liberalization and the real estate bubble, the economy assimilated by the real estate, the impact of housing purchasing by foreigners and outlanders, the operation of provident fund, the way out for limited property housing, the transmission mechanism for land regulation impact on macro-economy, security housing fund sources, the housing filtering mechanism, the housing regulation effects etc.

By series of monographic analysis, Green Book of Housing Market finds out that: the security housing construction can promote social harmony and stability and also the steadiness, healthiness and fast-growth of economy; the new regional planning implementation has been strategically transformed from depending on administrative power and means to relying on economic means, legal means and market force such as regional planning; the financial liberation, high deposit and loan interest spreads and rates together boost the forming of real estate bubbles; the economy assimilated by real estate hinders the industry restructuring and entrepreneurship; the government policies can effectively impact on the housing purchasing of foreign capital, and further result in the fluctuations of housing market demands; there are problems of the housing provident fund operation, such as small capital operation scale, lack of financial channel, low profit, the added value not belonging to the depositors, the defection of cross-region regulation mechanism etc.; the out way of limited property housing can be found by the competition and restraints of urban housing and suburban housing, and finally achieved by their combination; the land regulation and control would affect the macro-economy operation by influencing credit scale, investment demands and wealth effect; the narrow fund raising channel of security housing construction leads to capital insufficiency; the housing filter mechanism can assist people of all income levels to find houses fitting their demands by optimizing the housing structure and classification; due to the impact of macro-economy operation status, the imperfection of regulation mechanism and the poor implementation, the housing regulation repeatedly fails to achieve the ideal performance.

Annual Report on Development of Housing Market in China (2010-2011) is an important policy-making reference and research reference for governments of all levels, (especially the city government), domestic and foreign enterprises, associated research institutions and the public.

Enquiry call: The Urban and Real Estate Economic Research Office of CASS Institute of Finance

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