No industry can bring more love and hate to the urban Chinese than real estate, or rather the building and supply of residential housing.
China's 70 largest cities experienced a hike in housing prices by an average of 2 percent year-on-year in August, doubling the price acceleration from July, according to a Sept 9 announce-ment by the National Development and Reform Commission.
Only less than half a year ago, the industry was talking about the danger of a weakened demand and plummeting housing prices. That was when the entire world was under the seizure of the worst financial crisis in 80 years and markets were tumbling in many countries.
Being able to stem the crisis from becoming much worse is an achievement by leaders in Beijing, especially to prevent an overall setback from a potential housing market collapse, as what befell the United States. After just a few months of disheartening records, housing sales began to pick up in the nation's large cities, led by Beijing, Shanghai, Shenzhen and Guangzhou.
But it is a quite different story now, with the housing price index consistently climbing over the last six months. More importantly, since monetary authorities are now more prudent in providing new loans, and the stock market is unlikely to regain its yearly high of 3,600 points (as measured by the Shanghai Stock Exchange Composite Index) for the remainder of the year due to the tightening of overall credit, it looks as if the only market where mass investors can hope to continue to make money is with urban residential properties.
In the meantime, thanks to various cities' extensive public infrastructure programs - most notably with the construction of subways - greater speculative room has opened up for existing and planned properties.
However, officials would be wrong if they think it is time to give free rein to the property market and even count on it to lead the economy's new growth.
Municipal officials would be more mistaken if they attempt to rely on the property market as the sole solution to local development and to the unemployment problem.
It is true that China needs a lot of construction. But social consequences vary from erecting different buildings with different technologies and different price tags.
Building economy units for the mid- and low-income population with energy-saving technologies and public transit conveniences is a service to the people and will in turn help a city attract young professionals, who are needed for charting a long and steady course to financial recovery.
In contrast, expecting to reap from real estate speculation, especially the buying and selling of luxury properties, can be as foolish as expecting the stock market futures to do the same thing. In fact, there is ample evidence that a seemingly unbridled rise in prices is not a good thing for anyone, not even for developers and investors.
Reports are accumulating that higher asking prices are not helping developers generate higher revenues. The actual sales in housing units have not been on the rise in cities where the highest per unit price is often quoted, namely in Beijing, Shanghai, Shenzhen and Guangzhou.
This does not come as a surprise for there are also reports that between January and March, most new homes were bought for pure residential purposes. Since May, more have been bought for investment purposes. But once investors are turned off by the high prices in one market, as may be the case now, they may shift to other markets in no time.