The re-emerging frenzy in the housing market indicates the housing regulations, which have been in place for years, have failed to achieve the expected results. It also shows there has been no fundamental change in the housing market's speculative nature.
In a housing market rife with speculation, prices are usually decided by market expectations that expand the price bubble. But the expanding housing bubble and continuous price rise will touch the bottom line of the housing regulations and hamper the efforts of China's new leadership to promote its healthy development. Further increase in housing prices will be against the new leadership's economic strategy, which focuses more on quality development, and undercut its efforts to improve people's livelihood.
Recent reports of the monetary authorities and the Chinese Academy of Social Sciences both say high housing prices have already seriously affected ordinary people's livelihood and undermined their capability to buy a house. The excessively high proportion of income that ordinary people have to set aside to buy a house forces them to drastically cut their consumption in other fields, which is not good for the overall economy.
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