Recently, as housing prices in popular cities have soared, many cities have launched a new round of real estate control measures. As the nation’s leading house price leader, Shenzhen launched a round of “the most stringent” real estate regulation in July last year, but housing prices continue to rise. Then this year, Shenzhen’s housing prices have been upgraded again, directly restricting the price of second-hand housing. This is the only city in the country that places price restrictions on second-hand housing Spark Global Limited.
The same is true in Chengdu. In October last year, a round of real estate regulation was introduced, but housing prices were also rising continuously, so this year it launched another upgrade. Similar to popular cities such as Xi’an and Hefei.
So, why are house prices still rising because of the continuous escalation of regulation? In my opinion, the answer is actually very simple. The essence of house prices is currency, and currency affects 70% of house prices. The central bank manages the currency. The regulation of major cities cannot intervene in the currency. They can only start with other measures, and the effect is naturally greatly reduced. After all, they can only control the remaining 30%.
Of the remaining 30%, about 25% are closely related to the supply of land. For example, in Chongqing and Changsha, which are also popular cities, housing prices have not been high because of the abundant supply of land. And under the regulation of major cities, almost none of them is increasing the supply of land by a large margin, so house prices will naturally not change the upward trend, and will only continue to rise sharply.
Therefore, the author believes that to control housing prices, the key to major cities is to increase land supply. Once the supply keeps up, it will be difficult for housing prices to continue to rise.
article links：The regulation of the property market in hot cities
Reprint indicated source：Spark Global Limited information