Soaring home prices generate high anxiety

Source:Global Times Published: 2016/9/28 21:28:40 Last Updated: 2016/9/28 22:18:39

Illustration: Liu Rui/GT

Editor's Note:

A resurgence of house price hikes in big Chinese cities has caused public panic. It's believed the price rally will continue in China's booming real estate market. What effects it will have on the lives of Chinese? Is it a warning signal that a real estate bubble is inflating to a bursting point? The Global Times collected three opinions on the issue.

Government must step in to cool market

The Chinese real estate market is in a frenzy again. On September 23, a piece of land in Suzhou, Jiangsu Province, was sold a record 10.67 billion yuan ($1.59 billion). The same mania is happening in a lot of second-tier cities in eastern China. Excessive premium pricing of land fans the flames of the already seething real estate market, drawing an influx of home buyers with rigid demands and speculators. This is not the first time that the Chinese property market has fallen into a collective madness. The causes are not simply irrational investment and the "herd behavior."

The periodical fever in second-tier cities is indispensable. First, a colossal amount of hot money is turning from first-tier cities to second-tier cities for greater gains due to the increasing investment restrictions on first-tier cities. The influx of capital is tremendously boosting the rise of property prices in second-tier cities, and the depression of the stock market makes the surging real estate market more appealing to investors.

Second, the booming property market is a reflection of monetary policies. Since 2009 when a series of stimulus programs were adopted, Chinese real estate prices in first-tier cities have been rising dramatically, and the situation is happening currently in second-tier cities. Negative interest rates and the depreciation of the yuan are making investors more conservative. The robust performance of the real estate market has persuaded investors that this is where their capital can be preserved.

Third, investors have gradually developed the idea that government regulation cannot fully control the property market. Every bout of booming has triggered a round of regulation, but none of the rules last long, no matter how rigid they are in the beginning. The prosperity of the property market is essential to local finance, so in the long term, real estate is still a hotspot for investment.

No matter how obvious the boom might be, the current situation is detrimental to the economy. The burst of property prices has suppressed self-occupied home buyers, burdened enterprises and jeopardized the real economy. How to lead the property market back onto a normal track is a major challenge for the government. Rigid control, although harmful to economy in the long term, is a less evil approach to rein in the mad market. Meanwhile, more measures should be adopted to ease the pressures on enterprises, and direct money into the real economy.

The Beijing Times

Speculation more attractive than work

The skyrocketing property market is like a prism that reflects diverse choices of different social groups. It has already hurt our society.

There is a joke that reflects the truth of the harsh reality. A man who sold his house 10 years ago to fund his start-up business now has to use the hard-earned profit from his successful company to buy back the property he once sold. It indicates that people working hard to realize their dreams find themselves unable to gain ground financially due to the speedy growth of home prices. Rising home costs have devalued the meaning of work.

It should be societal consensus that happiness can be created through industrious work. However, when soaring home prices offer far more gains to a person than hard work or even insurmountably outpace the income of a hard-working person, real estate speculation will prevail, because few will want to work an actual job. This will eventually mislead the public and foster incorrect values.

According to the central bank, Chinese banks extended 463.6 billion yuan ($69.5 billion) in new loans in July, of which nearly 99 percent were home loans. In a sharp contrast, new company loans have seen negative growth.

Large companies making products ranging from home appliances to food and alcohol have all engaged in real estate investment.

In this context, individuals who put more focus on the short-term returns of property speculation will lose the chance to develop skills and networks for developing their future. Companies that deviate from their own industries will likely lose core competitiveness, which in the end will pose threats to the sound and sustained development of the Chinese economy.

The property market can in no sense be allowed to neutralize the value of hard work. When non-home-owners want to become mortgage slaves and speculators dream of making easy money in the home craze, society will pay the cost with a drop in vitality and creativity.    

The property industry is an important part of many countries' economy, but can by no means form their core competitiveness.

Most importantly, we cannot lose our faith in hard work and rely instead on profiting from soaring home prices. Rather, we should put more trust in our own hands. Otherwise, however many homes we own, we will still be homeless.

People's Daily

Expensive houses weighing down youth

Since earlier this year, property prices in China's first- and second-tier cities have been soaring. For those who have neither an apartment nor enough money for a down payment, this trend is making their lives increasingly hard. The only thing they can do is to lower expectations for their future house or postpone their plans to purchase a flat.

Having a place to live of one's own is one of the basic needs of human beings. However, a growing number of people are treating real estate as a field of investment offering huge profits, pushing up housing prices. In the end, having a place of one's own has become a luxury for a large swath of Chinese.

For a majority of young people who are working in first- and second-tier cities, the goal of buying a house is also their nightmare.

Those who paid the down payment have to live frugally, reduce their plans for visiting parents, traveling and shopping, in order to save more money to pay for loans.

In many cases, parents contributed their life savings so that their children would not need to live a hard life for a house in a big city. But after they spent all that money, their living standard after retirement will become another intractable problem. A huge economic burden brings tremendous psychological pressure. Yet even so, anyone who owns a house will always be admired by people who haven't got one.

In Beijing, houses of a great many people are located outside of the Fifth Ring Road, but the workplaces of quite a few of them are near the city center. That means they have to spend hours commuting, being worn-out during rush hours when they can never find a seat while being mobbed by people.

Sharply rising property prices have twisted our lives. They force us to keep busy for our basic needs as if we are on a train that travels several hundred miles an hour. We have no time to stop and take a break, no time to pay a visit to our families, no time to enjoy a long vacation or even no time to read a good book.

The real estate market is thriving, but as a result, more and more people cannot afford to buy a house. This is nowhere near a healthy trend. Policymakers urgently need to think hard on the phenomenon as well as solution to it.

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