On December 26, 2014, the China Academy of Social Sciences (CASS) published its Housing Green Paper, the China Housing Development Report (2014-2015). The report made a number of predictions: that the restrictions on house purchases will be eliminated in 2015; that, with upcoming government incentives, there is hope that the housing market will have a soft landing; and that half of the developers will no longer be in business.
The report predicted that, in the next couple of years, the housing market will continue to decline. In the last 5 cities (Beijing, Shanghai, Guangzhou, Shenzhen and Sanya) that currently have restrictions on the number of houses one may be allowed to purchase, these restrictions will be removed within a year. Ni Pengfei from CASS commented that once the restrictions are eliminated, the assumption that it is a seller’s market and the myth of ever increasing housing prices will be completely shattered.
The report predicted that the central and local governments will promulgate policies to facilitate a soft landing in the housing market. Such policies may include removing any restrictions on how many houses one can buy, loosening the lending requirement for those who own two or more houses, and reducing transfer fees and personal income taxes.
Ni Pengfei held that, given the low returns on housing investment and the surplus in the housing market, government incentives would not stop the decline of the housing market. The report expressed the belief that, with the surplus of houses on the market and the surplus of developers’ capabilities, more than half of future developers will change their line of business or otherwise disappear from the market.
Source: China News Service reprinted by Xinhua, December 26, 2014
http://news.xinhuanet.com/politics/2014-12/26/c_127338644.htm