Chen Zhencheng: Prices, Land Prices, Prices Rise, Why Is Housing Reasonable?

In the "two sessions" in March 2010, Premier Wen Jiabao made clear in the "government work report" that we should "curb housing prices rising too fast". In April 2010 and September, two clusters of control policies were introduced to control housing prices.

On December 26, 2010, Premier Wen Jiabao, speaking at an interview with the voice of China on the Central People's broadcasting station, said that we must keep house prices at a reasonable level.

This year, the central government has taken ten measures and five measures against the real estate market. "Now it seems that the implementation is not good enough."

The central authorities have taken measures to increase the intensity of the regulation and control of housing prices, and will continue to intensify efforts from two aspects: increasing the construction of affordable housing.

Second, leverage the leverage of credit to curb speculation.

And to strengthen the management of land, the land should first be used to build affordable housing, for the speculative use of land will be strictly managed by the central government.

Premier Wen said, "in my term of office, we must keep house prices at a reasonable level, and I will work hard to achieve this goal and never shrink back".

That is to say, the central government's judgement on current housing price and regulation is that housing prices are not a reasonable level, and the target of real estate regulation has not yet reached. It will continue to raise real estate regulation and control, introduce new regulatory policies, and increase the regulation and control of housing prices.

However, I have to admit that in front of the resolute statement of the decision-making level, the reality of the macroeconomic situation and the real estate market is quite optimistic. It is difficult to achieve the goal of "keeping the price of housing at a reasonable level".

Chen Zhencheng, the author of this paper, thinks that if we want to make housing prices return to a reasonable place, we must eliminate the two huge obstacles, namely, the continued rise in land prices under high land prices and the inflation and the expectation of rising prices in the future. This is an unavoidable problem that must be solved.

First of all, high land prices provide support for high housing prices. Land prices continue to rise or continue to raise housing prices, providing reasons and thrust for housing prices to continue to rise.

There is no doubt that land is one of the most important "raw materials" for real estate development. Developers only buy land, or even store enough land to ensure normal or expanded development.

Under the current land pfer system and mode, under the driving force of land finance, developers will have to buy land continuously under the anticipated market trend of housing price and land price.

In recent years, almost all the land purchased at high price has digested the high land price cost through the appreciation of the house price or the appreciation of the land after hoarding, thus resolving the risk and obtaining a substantial return on the benefits.

Land prices continue to push up, in turn, pushing up housing prices or house prices.

In this way, the two prices of housing and land prices are pushing up each other, pulling each other up, just like two mutually coupled gears, one rotation leads to another rotation, and the two rotate together, pushing each other.

In the past two years, the government hopes to promote economic growth and stimulate GDP by easing monetary policy and credit policy, low interest rates and rising prices and rising house prices.

This year, liquidity, inflation, negative interest rates and other real estate regulation and control has formed a hedge, and once again little effect.

Originally, under the control policy role, the first three quarters of the year, the land price growth slowed down year by year, not only rare "land king", but also appeared in some places.

However, inflation has pushed up the valuation of assets such as real estate again. Real estate has returned to the option of preserving investment and inflation, providing support for high housing prices, continuing to push up house price expectations, and once again increasing the expected return on land investment, resulting in the recent rise in land prices.

After November 2010, the king of the country reappeared again and again, covering many second tier cities, and once again raised the premium.

Behind the earth king, there are lots of idle land.

Since 2004, the supply of land for real estate has increased year by year, and land supply has increased substantially this year.

In August 2010, the media disclosed that the Ministry of land disclosed 1457 idle land to the CBRC.

Subsequently, the Ministry of land and resources held a special press conference. As of the end of May 2010, the total number of idle land in the country was 2815, with an area of 169 thousand and 500 mu.

So far, the idle land is still continuing, and is still flooding.

For example, in Shanghai, from January 2009 to the end of 2010, 84 floors cost more than 10000, and 23 of them were close to or reached the standard of hoarding land for one year. Only 12 of them were started or fully started, accounting for less than 20%.

It can be seen that policy implementation is not in place, and the accumulation of idle land is the main problem facing the land market.

On the other hand, although the central economic work conference in 2010 has clearly put the overall level of stable prices in a more prominent position, although the central bank has raised the deposit reserve ratio and the 2 interest rate increase 6 times in 2010, so far, the government is still conservative in its actions against inflation.

Not only did the central bank raise interest rates too slowly, but the time dragged on too long, and the two rate hikes were obviously not enough, raising the total interest rate by 50 basis points, which was difficult to compare with the continuous interest rate cut in September 16, 2008, that is, the 5 consecutive interest rate cuts in a hundred days and the rate cut by 216 basis points.

After the second increase in interest rates this year, the rate of negative interest rates remained as high as 2.35%, and the central bank seemed still reluctant to raise interest rates on a continuous basis, based on the current signs.

Therefore, the market expects inflation to continue, prices will rise and house prices may continue to rise.

In this way, housing prices, land prices and their expectations may also be pushed up.

Chen Zhencheng, author of the paper, believes that if the government fails to take more stringent control measures in time, the land price or land price expectation may continue upward, and the result will be to further push up housing price or house price expectation.

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In view of this, if we want to make the real estate regulation really effective and bring the housing prices back to a reasonable level, we must put a heavy blow on inflation and stop the price rise, and make the prices fall down reasonably. At the same time, we must take further measures to increase the real estate regulation and control, especially increase the intensity of land regulation and control, resolutely and strictly implement the policies that have been promulgated, and severely crack down on idle land and land price.

In order to consolidate the regulation results and strengthen the implementation of the existing policies and measures, the Ministry of land and resources issued a circular on the policy of strictly implementing the land use control policies and promoting the healthy development of the land market on the evening of December 19, 2010, calling for the strict implementation of policies and measures for real estate supervision and control, and cracking down on illegal activities such as land speculation and idle land storage, and resolutely curb the excessive upward trend of land prices in a small number of cities.

This is the first policy notice issued by the central government on the real estate market after the central economic work conference held in 2010. It can be regarded as a signal for further regulation of the new round of real estate regulation and control.

On the morning of December 16, 2010, Xu Shaoshi, the chief inspector of the state land, interviewed 12 leading officials of the local governments in Beijing.

In the afternoon of December 16, 2010, the Ministry of land and resources, the Ministry of supervision, the Ministry of human resources and social security officially launched the "accountability" of land management in the whole country.

In December 20, 2010, the Vice Minister of land and Resources said that we should firmly implement the confidence and initiative of the central regulatory policy, speed up the investigation and disposal of idle land, and resolutely crack down on illegal land use.

In 2010, the policy of land hoarding was repeatedly emphasized to speed up processing and increase penalties.

However, lessons learned show that policies and implementation will generally be greatly reduced.

As a matter of fact, the policy of fighting land hoarding has almost become a pendulum.

Moreover, in the first 12 illegal land and counties that have been interviewed, there is no list of cities where large numbers of hoarding households and listed companies are listed.

It can be said that if the top-level design of policy can not become the sword of implementation, the government can not effectively combat inflation, prices and house prices continue to rise, and can not fight the hoarding land in accordance with the law. Then, the author Chen Zhencheng believes that it is very difficult to eliminate the mad fire disease in the land market, so it is difficult to control the stubborn disease in the land market.

As a result, why should we lower the price of land, and then, how can we reduce housing prices and make them return to reasonable?

Dylan Grays, a Societe Generale of France, once said: buying commodities is equivalent to selling human ingenuity.

It can be applied to China's real estate market: selling high land, or buying the innovation power of real estate, shaking the confidence of real estate regulation.

To fight inflation, help real estate regulation and enhance confidence in price regulation and housing regulation, the central bank may continue to raise the deposit reserve ratio early next year or even the end of the year, and raise interest rates in January next year.

This is because, compared to the actual effect of raising interest rates and raising the deposit reserve ratio, what the government needs or needs most is the signal function and the expected impact of its actions.

It should be said that in order to strengthen the effect, we should increase the deposit reserve ratio even at the beginning of next year or even the end of the year.

At this time, the credit supply in 2010 has ended and the credit in 2011 has not yet started. It is a vacuum in the pitional stage. The increase in deposit reserve ratio has little effect on banks, but it can receive quite good policy results.