1/5
We shouldn't be surprised that measure after measure to stabilize and revive the property market has failed. In a highly speculative market, what drives buying is mainly expectations of continued price appreciation.
ft.com
We shouldn't be surprised that measure after measure to stabilize and revive the property market has failed. In a highly speculative market, what drives buying is mainly expectations of continued price appreciation.
ft.com
2/5
By this definition China's property market has been highly speculative for well over a decade. With rental yields close to 1%, it was always smarter to rent a big apartment than buy a tiny one, but people kept buying because "property prices can only rise".
By this definition China's property market has been highly speculative for well over a decade. With rental yields close to 1%, it was always smarter to rent a big apartment than buy a tiny one, but people kept buying because "property prices can only rise".
3/5
That means that the only way to stabilize or revive the property market requires reigniting the property bubble and setting off a new round of ever-rising expectations. Even if that were possible, it is something Beijing clearly doesn't want to do.
That means that the only way to stabilize or revive the property market requires reigniting the property bubble and setting off a new round of ever-rising expectations. Even if that were possible, it is something Beijing clearly doesn't want to do.
4/5
In that case the best thing the regulators can do is decide what a much smaller property market with much lower prices will look like, what the associated losses are that must be absorbed, and the best way to get there quickly.
In that case the best thing the regulators can do is decide what a much smaller property market with much lower prices will look like, what the associated losses are that must be absorbed, and the best way to get there quickly.
5/5
Of course that's much easier said than done. There will be a lot of angry homeowners and huge conflicts over how the losses are to be distributed, but trying to "revive" the sector will only make things worse in the medium term.
Of course that's much easier said than done. There will be a lot of angry homeowners and huge conflicts over how the losses are to be distributed, but trying to "revive" the sector will only make things worse in the medium term.
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