By Deng Yusong, DRC

2018-2-5

Given the fact that the interest rate of housing loans still stays at a record low and the short-term supply and demand of the market has undergone major changes, it is estimated that the pressure to stabilize the housing prices in 2018 will remain relatively huge. China's real estate market has witnessed great changes relating to the development stages and major contradictions in market performance. Further improvement of real estate related policies should not only focus on short-term conditions such as the decline of stocks, the historical-low loan interest rates, and the high-priced houses entering the market of the most sought-after cities, but also adjust the development goals in a timely manner and in light of the changes in different development stages of the housing market, speed up the reform of the housing system, formulate and put into effect the long-term mechanism of the real estate market, and strive to achieve sustainable and sound development of the real estate market.

The development of the real estate markets in advanced economies shows that the real estate market has distinctive characteristics. As the stages of development of real estate markets are different, the rules and characteristics of market performance differ from each other greatly. When we analyze the real estate market performance in 2018, we need to focus on some factors affecting short-term market fluctuations, and attach importance to the mid-to-long-term development trends. Therefore, we need to be aware of the following key points in observing the housing market performance in 2018. First, the development stage of the real estate market and major contradictions have undergone major changes; second, the housing loan interest rates are still at historic lows, which will bring forth relevant challenges; third, the short-term supply and demand relationship has also changed greatly; fourth, the leverage of household sector is on the rise.

Some basic judgments on the performance of real estate market in 2018. First, the investment growth of real estate development will continue to fall in 2018; second, the sales of new homes will depend mainly on financial policies in 2018; third, the pressure on stabilizing housing prices in 2018 remains relatively great.

Some suggestions on perfecting the real estate related policies. First, we need to adjust the development goals of real estate in a timely manner. Second, we need to speed up the reform of the housing system and establish an institutional system compatible with the development of real estate market in the new era. Third, we need to take the following measures to flesh out the long-term mechanism of the real estate market. 1. We need to set up a reverse regulation mechanism to balance lending interest rate and down payment loans and raise the rates of down payment loans in cities with balanced or tense supply-demand performance in 2018; 2. We need to further improve the land supply mechanism and determine the appropriate supply structure; 3. We need to establish a monitoring and early-warning mechanism, and improve the market regulation and control with a targeted and forward-looking approach; 4. We need to properly handle the relationship between the government and the market, and establish a unified real estate market system; 5. We need to straighten out the relationship between the central government and local governments in the management and control of the real estate market.