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Sharp Increases in Housing Prices Attributed to Dominance of State-Owned Enterprises

The state’s intervention in the market, China’s “invisible hand,” is putting pressure on private sector real estate developers, while encouraging a state monopoly in the real estate market. This leaves little hope for housing prices to fall, says China Youth Daily

Tightening bank credit lines, coupled with the rejection of second offerings in the stock market, are dramatically narrowing the financing sources available to local real estate developers. 

On the other hand, State-owned enterprises are expanding rapidly and their monopoly has become obvious.

China Youth Daily further suggests, “Obviously, when a monopoly exists, it will be much easier for the central government to reap benefits from this market. Therefore, falling housing prices, which is what people foresee, will never materialize.” 

Source: China Youth Daily, September 21, 2010