Business / Industries

China's housing market going through natural adjustment

(Xinhua) Updated: 2014-05-26 07:56

NANCHANG - The slowdown of China's housing market has prompted prophets to predict doom in the industry and even for the country's macro-economy. But analysts argue the market is going through natural and necessary adjustment, which is good for the economy.

The pessimistic market outlook keeps spreading as news stories about failures and bankruptcies of several real estate companies emerge.

China's housing market going through natural adjustment
China's housing market going through natural adjustment 
Statistics provide proof that the overheated market is cooling. According to the National Bureau of Statistics, only 44 among the 70 major cities tracked by the government saw housing price rises in May, the lowest since January 2013.

In the first quarter of the year, leading real estate companies saw a month-on-month decline in land purchase volume.

However, experts said the cooling down has offered a chance for the problem-loaded industry to release risks.

Li Daokui, professor at Tsinghua University, said the housing market needs adjustment.

"The longer the unhealthy development drags on, the more bubbles will accumulate and more imbalanced and dangerous the economy will be," Li said. "Only through adjustment can housing prices return to a reasonable level which meets average people's expectations and is good for urbanization and social harmony."

Wang Xiaoguang, researcher at Chinese Academy of Governance, said the housing market has experienced a rapid but unhealthy even abnormal development in the past 15 years.

The overheated property market largely boosted by speculative investment has caused a series of problems, he said.

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