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Can the Soaring Housing Price be Averted?

Author: Source: Date:2019-04-24
In response to Shenzhen’s soaring housing market, Shenzhen housing and urban-rural development bureau released a document on Deepening housing system and accelerating the building of a multi-source, multi-channel housing supply and guarantee system to encourage both the renting and purchase of houses on July 27th, 2018. The new policy highlights
 1 a shift from a market-led housing system to one featuring indemnificatory housing
 2 a turn in marco-regulatory policy to expanding supply
 3 the provision of both affordable commercial housing and public rental housing
 4 the promise of building 1.7 million units of housing by 2035, among which 1 million units should be left for talents

However, the document fails to capture the reality of Shenzhen’s housing market and has certain important flaws, including
 1 failure to include non-registered residents, which accounts for 2/3 of permanent residents in Shenzhen, for consideration of indemnificatory housing

 2 the focus on talents instead of low-income groups, running contrary to the aim and basics of indemnificatory housing policy
 3 deviation from the aim to provide ‘affordable’ housing, as the document sets the price of indemnificatory housing in reference to commercial housing 
 4 vague division of labor and responsibility between government, enterprises and the civil society
 5 shifting the burden of affordable housing provision to public institutions that are usually financial incompetent
 6 messing the indemnificatory housing market with commercial housing market
 7 an emphasis on the coherence of existing housing market regulatory policies that are not necessarily effective or sustainable
 8 the goal to build 1.7 million units of housing by 2035  

Three alternatives of Shenzhen’s housing market ahead, including
 1 sustaining high housing price, with strict government regulation to restrict rise or fall of the housing price

 2 burst of housing bubble, leading to devastating consequences to the economy
 3 a return to a balanced housing price steadily, without much market fluctuation