Call to protect, not further stimulate real estate market

The rare official notice urging property developers to "properly" reduce housing prices should serve as a stern warning to those who bid recklessly to send land prices soaring in first-tier cities such as Beijing and Shanghai.

To effectively and timely destock the housing inventory, local governments must take measures to stop the recent return of "land kings", who buy and sell plots at prices higher than even the current housing prices. It is not because such land sales will substantially change the overall supply or prices in local property markets, but by tolerating jaw-dropping high land prices, local governments will seriously undermine the credibility of the national campaign to slow down, if not totally stop, the rapid accumulation of unsold houses.

The real estate boom helped fuel China's robust economic growth for more than a decade from the beginning of the century despite frequent warnings against the forming of a dangerous housing bubble. Policymakers tried time and again to rein in the breakneck rise in housing prices but refrained from setting a peak price. Although the excessive surge in housing prices triggered loud public complaints in many cities, few local governments could resist the temptation of fat revenues from land sales and the immediate boost a booming property market gave to local economic growth.