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How do we solve the problem of high housing prices in China?

High housing prices are a silhouette of many contradictions since the reform and opening up. They not only involve urban development concepts, central and local financial power distribution, state-owned land supply systems, but also closely related to income distribution patterns, economic restructuring, and credit.

High housing prices are a direct manifestation of the imbalance between market efficiency and public interest. To solve the problem of high housing prices, we must adhere to the “location of the house is used to live, not for speculation,” The combination of policy tools, long-term mechanism to stabilize the purchase of housing expectations, administrative control to stabilize short-term prices, the formation of a “long gun and short gun” combination of balanced policy firepower, in order to get out of the real estate regulation of the past ten years, the more the price is higher.

  1. Strengthening market supervision in the short term and eliminating the “panic” purchase expectation

In 2016, housing prices in some cities skyrocketed. Apart from the need for just needed and improved demand, more demand was released in advance and improved demand. Under the strong expectation that housing prices are about to skyrocket, some real estate development companies are “selling for reluctance to sell”, and some intermediaries take the opportunity to speculate on housing prices and create a market atmosphere of “one room is hard to find”. There are also a variety of “down payment loans” betting house prices in the short-term skyrocketing arbitrage, these are direct manifestations of short-term market failure.

  1. Long-term construction of a long-term mechanism for the healthy development of real estate, building a “stepped” consumer expectations

Since 1998, China has stopped the physical distribution of housing, and the commercial housing market has gradually become the main channel to meet the housing needs of urban residents. From planning to market, the achievements of reform are not only reflected in the huge leap of per capita residential building area from 6.7 square meters to more than 30 square meters, but also laid the pillar position of the trillion-dollar industry in real estate, making it a powerful driving force for China’s economic growth. However, under the current credit monetary system, the liquidity of real estate has been greatly enhanced. It is monetary in terms of liquidity, and financial assets in monetary assets. The Fed frequently uses the term “real economy” to refer to the part of the real estate market and the financial market, which fully considers the “financial nature” of real estate. When the house is transformed from “brick and tile cement” to financial products, it must have characteristics suitable for investment and speculation. Our understanding of the real estate industry should also be deepened.

  • The main body of regulation should be transferred from the central to the local, forming a joint force between the central and local governments

The macro-control of the real estate market began in 2002, and the Ministry of Construction and other six ministries issued the “Opinions on Strengthening the Macro-control of the Real Estate Market to Promote the Healthy Development of the Real Estate Market”, which opened the curtain for the regulation of real estate in the country. Since the beginning of this year, the real estate market has continued its upward trend last year, but the situation of regional differentiation and uneven heat is more obvious. In the face of regionally differentiated markets, as the main body of macroeconomic regulation and control, the central government should start to establish a long-term mechanism, and more administrative control responsibilities should be handed over to local governments. The key elements such as land and taxation are in the local area. Only local governments can bear the main responsibility, and they can link up and down and form a synergy in real estate regulation.

  • Controlling house prices should be equal to risk prevention

The purpose of real estate regulation and control is to curb the formation of bubbles, and it is not possible to continue to triumph and form a “big rise”; nor can it overly affect confidence and cause “greatness.” Japan’s miscalculations in the rhythm and timing of the introduction of financial and real estate policies in the 1990s have led to a burst of real estate bubbles, which is a forerunner. The long-term mechanism focuses on long-term and long-term effects, with the aim of promoting the steady development of the real estate industry.

  • Adapt to the development trend of urbanization, fully implement the “human-land link”, and increase the land supply elasticity of cities with rapid population growth

The land management thinking of “measuring and investing in” and the lack of land for dignitaries are the direct factors for the shortage of housing supply in some cities. At the beginning of the reform, migrant workers were migratory birds, spring and winter, the city was the station to earn money, and the hometown was the ultimate residence. With the deepening of the household registration reform, it is no longer a luxury to find a better life in the city. Newly employed college students and migrant workers every year are urban builders and should be the recipients of mature urban infrastructure. In the future cities, there will also be competing for the population. A city with flexible land supply and stable housing prices can absorb employment, absorb the population, and finally achieve a virtuous circle.

  • Promote real estate tax reform, reduce taxes and fees on the transaction link, increase the tax on the retention link, and levy the vacant house property tax in a timely manner

At present, China’s real estate tax system mainly has 10 types of taxes, covering development, construction, trading, and possession. The real estate tax structure is characterized by “re-incremental light stocks and heavy construction transactions.” The tax burden of the real estate industry is much higher than the overall national level. We should promote the reform of real estate tax, adjust the taxation of various links, reducing the tax and fees of transaction links, supporting the replacement of residents and the circulation of real estate. Increase the retention of taxes and fees, and regulate the unfair distribution of wealth. By deducting tax types and optimizing tax structure, conditions are created for real estate tax to replace land transfer income. At the same time, pilot projects for vacant housing real estate should be carried out to reduce the waste of social resources, guide the purchase of housing, and avoid housing as a tool for speculation.

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