Reducing costs and burdens is the basic direction of housing reform

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This post was last edited by Watcher Star on 2016-3-3 at 11:22. For a long time, we have come to accept high housing prices as normal, ignoring their obvious harms. House prices are seen as only able to rise and not fall; residents bear an excessive burden on housing costs, and the industrial structure has become \"real estate-oriented.\" To deepen housing reform, the basic approach should be to reduce the housing burden on residents and stabilize the prices of ordinary commercial housing. Achieve coordinated development between the housing market and the macroeconomy through mutual concessions. I. The role of the housing market in driving economic growth has peaked. Over the past decade or so, the unprecedented prosperity of the housing market has greatly contributed to China’s economic growth. From the perspective of the economic structure, China’s economic growth over the past decade has been driven primarily by fixed-asset investment, with housing investment being a major component of such fixed-asset investment. Since 2014, the role of the housing market in driving macroeconomic growth has shown signs of peaking. The growth rates of various key indicators in the housing market have declined significantly, thereby dragging down the growth rate of the macroeconomy. Firstly, the growth rate of investment in development has declined, resulting in a slowdown in investment growth, which is considered the main driver of economic growth. In November 2015, the total investment in the development of commercial residential properties in China amounted to 5,906.9 billion yuan, representing a 0.7% increase on a year-on-year basis; this figure was approaching zero growth or even negative growth. Secondly, there was negative growth in the area of new construction, and the housing construction industry’s capacity to absorb labor has declined significantly. In November 2015, the total area of new residential construction projects in China was 970.77 million square meters, a decrease of 15.3% compared to the previous year. Furthermore, the overall sluggishness in the land market has led to a reduction in local financial resources. In November 2015, the total land acquired for real estate development in China was 198.94 million square meters, a decrease of 33.1% compared to the previous year. 　　II. The excessive burden of housing is a major reason for the difficulties in China’s industrial transformation. On the one hand, the role of the housing market in driving economic growth has reached its peak ； On the other hand, high housing prices have led to a profound \"real estateization\" of the economic structure, manifested in weak consumer spending, **dominant investment activity, widespread involvement of enterprises in the real estate sector, and significant difficulties in industrial transformation and upgrading. 　　From the demand side, high housing prices place an excessive burden on urban households, resulting in weak consumer growth, and there is a risk that the real estate economy could turn into an \"economy of homeownership slaves\". At the micro level, household residents manage to acquire home ownership, only to inadvertently become \"home slaves,\" working for banks and developers for the rest of their lives. The high mortgage payments force home borrowers to cut back on spending and fear losing their jobs, resulting in a decline in both consumption levels and happiness indices. At the macro level, the low disposable income of homebuyers also leads to insufficient domestic demand in the economy, hindering the transformation and upgrading of industries.