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Reform time for real estate
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It is unreasonable to ask for government intervention to prevent the decline in housing prices, says an article in Dahe Daily. The following is an excerpt:

Shenzhen's housing prices have decreased to what they were one year ago and turnovers shrank to the level of 10 years ago, according to a report by the local real estate research center. The report then asked the government to implement market-saving measures such as tax-cut or relaxing monetary policy.

No doubt, housing prices have been falling in places across the country. Is the request for government actions reasonable? Why is it that everything can fall except hosing prices?

Once, China's household electric appliance prices slumped, but the slump pushed forward the industry's self-reform and it finally benefited consumers. Now it is time for the real estate industry, which had been reaping benefits for more than 10 years, to get rational again.

Excessive capital has made this market too speculative.

Stories from ill-intentioned alarmists may include bad debts, economic downturn, sharp drops in revenue and greater difficulties for the government to sell land, all of which, however, only expose that both banks and the government have been "kidnapped" by the real estate industry.

(China Daily July 16, 2008)

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