Yi Xianrong: Why can't real estate be a means of stimulating the economy in the short term?

Yi Xianrong

Since 1998, when China's housing adopted the reform of monetization and distribution, the real estate market has become the driving force for residents to upgrade consumption and drive the entire economic growth. The speed and slowness of China's economic growth are to some extent related to the regulation and control policies of the real estate market. The housing market often becomes a tool to stimulate economic growth in the short term. It is precisely under this stimulus that China's real estate market has embarked on a new level one after another, so that the real estate market bubble is constantly blown up and various risks continue to accumulate.

At a meeting of the Politburo of the Cpc Central Committee on July 30, there were some new formulations for real estate policy. That is, adhere to the positioning that the house is used to live, not to speculate, implement the long-term management mechanism of real estate, and do not use real estate as a short-term means to stimulate the economy. "Not using real estate as a means to stimulate the economy in the short term" is a new formulation, which means that there will be major changes in the real estate market regulation and control policies, and truly return the real estate market to "insisting that the house is used to live, not to speculate".

The development principle of the real estate market of "insisting on the positioning of the house is used to live, not to speculate" has been put forward for several years, and it is also the development direction of China's future real estate market. However, the most fundamental problem in why this principle of real estate market development has not been truly implemented in recent years may be that some local governments have not given up the real estate market as a means to stimulate the economy in the short term. Because, the so-called real estate regulation and control policies issued by some local governments seem to curb the real estate market, but in fact, they mutate into the hunger marketing of the local real estate market, with the purpose of stimulating local economic growth in the short term. Therefore, the more many cities introduce real estate regulation policies, the faster their housing prices rise. "Not using real estate as a short-term means to stimulate the economy" is to reverse the thinking of local governments in this economic development.

Of course, to conscientiously implement the spirit of "insisting that the house is used to live, not to speculate, implementing the long-term management mechanism of real estate, and not using real estate as a means to stimulate the economy in the short term", the first thing to do is to implement the "positioning of insisting that the house is used to live, not to speculate". To achieve this, not only can the government's real estate regulation and control policy not be able to support housing prices (to let the house price be determined by the market supply and demand mechanism), but also to let the current administrative regulation and control policies of local governments gradually withdraw from the market, and increase the regulation and control of the economic leverage of the real estate market. Resolutely use tax policies to distinguish housing investment from consumption (such as adjusting real estate transaction tax and real estate transaction income tax, encouraging consumers who buy one house through these tax policies, and severely cracking down on speculators who buy more than two sets of housing), resolutely curbing real estate speculation, returning the real estate market to a consumption-led market, and also comprehensively tightening financial leverage (increasing the proportion of down payments and increasing mortgage interest rates for those who buy more than two houses), Economic leverage is used to force real estate speculators to withdraw from the market. At the same time, the government also has to return the real estate market to the consumer market through policies such as land management (that is, the housing to be built is limited at the time of land auction). Only in this way can the real estate market gradually return to rationality, and the long-term management mechanism of the real estate market can gradually take shape. If China's real estate market is a consumption-oriented market, then China's real estate market can not only embark on the road of sustained and healthy development, but also release unlimited housing demand, and the real estate market can also become the driving force for China's long-term economic growth.

(The author is a professor at the School of Economics, Qingdao University)

Source: China Economic Network