Where Is The Real Estate Regulation Going?

Abandoning the fluctuation of a specific industry as an important means of macroeconomic regulation and control, focuses on the radical solution to managing liquidity and reforming the land supply system.

In April 17th, the announcement of the State Council on Resolutely Curbing the excessive rise of housing prices in some cities is a sign that the new real estate policy has been implemented for more than a month.

The "soft landing" eulogy, the worries of "the two economic bottom", began to be seen frequently in the media.

The two kind of speeches, one positive and one negative, is actually the same voice: real estate regulation should be "enough to stop".

We think this argument is wrong, and if real estate regulation is abandoned halfway, it will once again ruin the opportunity to cure China's real estate market, and lay a major hidden danger for the healthy development of China's economy and social stability.

In April, when the new deal came out, the domestic real estate market suddenly cooled down, and the volume of the major cities decreased significantly. The situation of housing prices was temporarily curbed at least, and buyers and sellers entered a relatively rational wait-and-see state.

Compared with previous regulation, the new round of regulation has attached more importance to the regulation of supply and demand balance in housing market.

On the supply side, the supply of policy housing has increased, aiming to solve the housing security problems of the low-income families in the long absence of the government. In terms of demand, the new deal uses credit and other means to curb investment demand and combat speculative demand.

However, it should be seen that the real estate regulation has strong administrative color and lacks long-term institutional measures.

The purpose of regulating and controlling the real estate industry should not be confined to the suppression of high housing prices. Instead, we should radically change the dependence of economic growth on real estate and end the situation of completely relying on the market to solve the housing problem.

Strengthening the construction of affordable housing is a highlight of the new deal. Only when this policy is implemented, can the market return to the market and the government return to the government.

Therefore, let the real estate regulation get rid of the administrative movement, return to the track of the rule of law and conventional supervision, and invest heavily in the construction of affordable housing in the long run, so as to get out of the strange circle of "increasing the number of ups and down".

Whether the regulation measures can be effective depends on whether the market can form stable expectations.

Policymakers should also abandon the practice of taking the fluctuation of a specific industry as an important means of macroeconomic regulation, focusing on the radical solution to managing liquidity and reforming the land supply system (see the seventeenth issue of this 2010 issue, "how to adjust real estate expectations").

Since 2007, many rounds of real estate regulation have been fruitless. One of the important lessons is that the lobbying community with strong resistance to regulation and control is strong, and is good at misleading the public.

When real estate regulation seems to affect economic growth and capital market, the government will hesitate.

At the moment, the European sovereign debt crisis is still spreading, and the external uncertainties of China's economy are increasing.

This is more beneficial to the stakeholders who resist regulation.

At present, the real estate regulation policy is slowing down, and local governments such as Shanghai have repeatedly delayed the introduction of regulatory rules. The real estate market has seen the first policy "vacuum period" since the new deal.

The vast majority of developers have not yet reduced the price of new sets, or even slightly increased prices; the listing of listings in the second tier housing market in the first tier cities has dropped markedly compared with the initial stage of the new deal; some urban land markets have been rekindled.

There are signs that market expectations are changing quietly at the beginning of the new deal, which makes people rethink past lessons and fear that regulation will be fruitless again.

At this critical time point, three problems need to be clarified.

First, more market-oriented means of real estate regulation can promote the long-term healthy development of China's real estate market.

The real estate industry has many policies and policies, and the policy market has become a nightmare in the industry.

Although the regulation of administrative means has achieved immediate results, it is not conducive to the establishment of market rules and order. It not only makes it difficult for the market to form stable expectations, exacerbates market volatility, but also makes rent-seeking and corruption more effective.

Real estate regulation should be gradually shifted from the discretion to the institutional construction with long-term planning and strategic thinking.

Only in this way can the real estate market avoid big ups and downs, so that it can be avoided as a "prey" for rent-seeking and profiteering of special interest groups.

Second, first effective real estate regulation will help domestic demand growth and innovation incentives.

As we all know, domestic demand and innovation are the source of China's sustainable economic development.

Soaring housing prices in major cities in China have played a role as "pumping machines" in the demand for funds in other emerging industries and in the financial resources of small and medium-sized cities, making it more difficult to adjust the economic structure, and further widening the gap in regional development.

The real estate asset bubble will burst after expansion, which will bring disaster to China's economy and society.

The government should guide the rational flow of investment and encourage innovation while regulating the housing market.

Third, the premise of the real "soft landing" of the real estate market is the further advancement of China's economic restructuring and the reform of fiscal and taxation system.

A few "acute" administrative control measures, even if they achieve "soft landing", are not stable. At best, it is a short-term consolation.

At present, the main government should eliminate noise, increase effective supply, and resolutely curb irrational demand.

In this round of economic crisis, the withdrawal of stimulus policy can start from the housing market.