New regulations have been proposed, to be implemented by the end of 2014, requiring the registration of real estate. Corrupt officials are trying to sell their real estate before the regulations take effect. According to Zhongyuan, a leading real estate brokerage firm in China, the effort to sell quickly has played a large role in the downturn of the housing market. Zhongyuan, one of the largest brokerage firms in China, has tens of thousands employees in over 30 major cities throughout China. Shi Yongqing, Zhongyuan’s founder, is pessimistic about the prospects for the housing market. “There are three indicators of a real estate bubble: over-building, excess credit, and prices that are too high. China’s housing market has all three. None of these problems can be solved easily.”
Corrupt Officials Are behind the Housing Market Downturn
According to Zhongyuan’s real estate brokers, “Officials are selling, and not just a few of them. The purchasing power of these officials is evaporating. They have become a driving force pushing the market downward." One observation is that the upcoming implementation of real estate registration has prompted these officials to get rid of houses they obtained using questionable means. On May 14, 2014, the Ministry of Land and Resources announced that real estate registration will be a priority for its rulemaking in 2014. The objective is to release a final draft by the end of June.
Sources:
First Financial Daily reprinted by China Economy, May 29, 2014 http://www.ce.cn/macro/more/201405/29/t20140529_2891382.shtml
People’s Daily, May 27, 2014
http://house.people.com.cn/n/2014/0527/c164220-25068014.html