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Let's talk about China housing prices and not be hyperbolic

Earlier in the week I speculated that China's recent housing directives might be relaxed given the pronounced effectiveness they have had in cooling markets in so short a time.  Michael Pettis lays out the situation better than I in his most recent post and seems to agree:

 Regular readers know that in my view for the past two years we have veered from panic to panic – stomping on the accelerator at one time and then stomping on the brakes as few months later – and I think it is only a question of time before growth slows sharply, and we panic once again and stomp on the accelerator.

I stated in my last post that this view of market loosening was also shared by most Chinese commentators. However further reading (and perhaps the influence of the government's recent insistence that the policies are here to stay) has led me to believe that I underestimated the current divide in opinion.  Recent opinion from China commentators and blogs appears in the aggregate to support the idea that policies will continue.

I found the following blog post to sum up the opposition viewpoint nicely. The always entertaining Pi HaiZhou had this to say in an article entitled "I would prefer to see property stocks fall and I'm unwilling to watch housing prices rise" (a much better title in the Chinese):
。如果三套房贷政策真的出现松动,如果高层真的授意央企拿地,那么,被称为是“最严厉的房地产调控政策”,也将变成“最短命的房地产调控政策”,这意味着国家对房地产调控半途而废,意味着让广大老百姓怨声载道的房地产价格又将出现报复性上涨。不仅政策的权威性受到质疑、政府的信用受到质疑,而且中国经济与政治最终将沦落到被地产商所绑架的地步。虽然从表面上看,房地产的高价拉动了经济的发展,实际上高价房地产正成为中国经济发展的严重桎梏。因为老百姓在购买了高价房之后,少则十年、二十年失去了消费能力,多则一辈子都成为房奴。而社会问题更是因为高价房而蜂拥而至。社会贫富差距拉大,社会道德沦丧,优生优育问题等等,高价房颠覆了整个中国社会,成为当今中国社会罪恶之根源。
 
If the government loan restrictions for purchases of third homes are relaxed....then what has been called "the most severe property market tightening policies" will instead become the "shortest property market tightening policy ever".  It implies that the state has given up on its tightening policies halfway through.  It implies that the widespread cries of injustice from the ordinary people about property prices will once again be on the rise.  Not only will people question the governments authority, but their credit will also become suspect.  In addition, China's economy and government will be reduced to position of having been kidnapped by the property developers.  Although on the surface it looks like property prices has carried the economies development, actually the increasing prices have become a ball and chain for China's economic development.  Because after the ordinary person buys  a high priced home, he gives up some of his consumption power for ten, twenty years.  At the same time he becomes a slave to this house for his entire life. Social problems will further come around because of the high prices.  The income gap will increase, society's morals will perish.... High housing prices overturn China society and have become the root of all evil for contemporary Chinese society.
 
 
 
 
 
 
I will be on vacation next week. Hope to see you on my return.