The long-sluggish domestic property market has not witnessed a traditional "Gold September and Silver October" sales peak time. It is reported that in September, the housing deal volume in Shanghai, the country's largest city and also economic hub, was only 20 percent of that in the same period last year. More important, surveys show that the real estate market will continue to be sluggish for a certain period. According to the latest questionnaire conducted by the People's Bank of China, the central bank, only 13.3 percent of the polled intend to purchase houses in the last quarter of this year, 1.8 and 2.8 percentage points lower than the third quarter and the same period of last year respectively. The figure is also a record low since 1999.

Different from the previous ones, the latest recession in the country's property market, which lasted nearly one year, has seriously restrained housing demand of ordinary people. In such conditions, both developers and potential housing buyers have become puzzled about the trend of housing prices in the future. In their recent campaign to cut down housing prices, more and more property developers have appealed to the government to rescue the endangered industry from the verge of collapse.

For a long period of time, people have been concerned about the property market just as they have been about the stock market. The unilateral imposition of stamp tax on stock transactions by the government in mid-September, together with some other favorable measures, did reverse the trend of continuous fall of this once-bullish stock market and to restore investors' confidence to some degree after a 70 percent decline. Will the property industry become the next to be rescued by the government just as some developers have called for?

Closely related with the livelihood of ordinary people, the property market is essentially different from the stock market, which has been a main investment channel for people to improve their property incomes. After experiencing a 10-year rosy growth, the unit price of commercial houses is now far beyond the purchasing capability of the majority of urban dwellers. The high-perched prices, although warmly welcomed by speculative investors, have also seriously pressed self-housing demand of wage earners and even served as a draw on the industry's self-growth.

Also, the continuous speculation has resulted in excessive dependence of the national economic growth upon property investment, which will form a vicious cycle. Under these circumstances, any measure to return commercial houses to reasonable prices will be welcomed by ordinary consumers. And it will be a necessity for a sustained and healthy development of the national economy.

In fact, the current bleak housing market has been a result of the government's macro-control measures in the past. The upward trend of housing prices should be turned down in the current heavy wait-and-watch atmosphere. According to released data, the sale prices of 44.8 percent of the buildings in Shanghai have already begun to fall. A lot of developers no longer dare to stock land for future purposes. In a recent bidding for six plots of land in Shanghai, only three plots were sold out at the bottom prices.

The bleak market demand also begins to play a positive role in stopping the property market from losing its reason just as it did in the past. But as far as the current housing prices are concerned, they are still at a very high position. The government should hold on to its macro-control measures until the prices decline to an acceptable level.

Overseas experiences indicate that in the property industry's cycle from prosperity to recession, some problems and contradictions may arise. For instance, in the banks' implementation of the polices on second-hand houses, some medium- and small-sized property firms were pushed to the brink of collapse due to the abrupt decline of the deal volumes. Also, some house purchasers demanded their purchased homes be returned because of the fall of the prices. All these problems, originating from the lack of effective supervision and developed intermediary services, should get high-degree attention from relevant government departments.

The emergence of such problems and other similar ones also indicates that the government should work out a series of auxiliary measures.

At the end of last year, the Shanghai municipal government took out 2 billion yuan from the returns of its public housing fund to build houses for lower-income people. In some of its districts, some local governments have even built such kinds of government-subsidized apartments to accommodate white-collar employees to absorb high-end talents.

However, given that only a small portion of residents can benefit from the current housing policies, the government should also work out more follow-up measures and resolve the housing problem for more people. It should also take viable measures to prevent the current macro-control policy from excessively compromising the property sector.

In this round of macro-control measures, the government should still stick to its previous policy of containing the rocketing of housing prices and returning them to reasonable levels.

(China Daily October 8, 2008)