Foundation Engineering Network News: The 'Housing Green Paper' release conference and the China Housing Development Seminar under the trend of urban-rural integration, co-hosted by the National Academy of Economic Strategy of the Chinese Academy of Social Sciences, the Economic Information Daily of Xinhua News Agency, the Center for City and Competitiveness Research of the Chinese Academy of Social Sciences, and the Social Sciences Academic Press, was held in Beijing. The conference officially released the housing green paper 'China Housing Development Report (2013-2014)' completed by the National Academy of Economic Strategy of the Chinese Academy of Social Sciences. The green paper predicts that housing prices in first- and second-tier cities will peak in the short term as early as the first quarter of 2014, and will stabilize with a slight decline before the fourth quarter of 2014.

The CASS green paper predicts that housing prices will fall in 2014 based on four main points: first, the sharp rise in housing prices has reduced housing affordability; second, the explosive growth in housing sales in 2013 has largely consumed self-occupancy housing demand; third, the competition for land kings by developers at the end of 2012 and in 2013 indicates a significant increase in housing supply later; fourth, city governments where housing prices have risen too fast will face greater political pressure, and regulatory policies may be upgraded.

The reporter of Foundation Engineering Network believes that the four points in the CASS green paper are reasonable. In addition to these four points, the most fundamental reason lies in the constraints of China's total population size and structure, which have now entered a peaking and declining trend.

Last year's surge in housing prices may indicate two aspects: first, many people bought houses. Many purchases certainly include overdrawn rigid demand, but it also shows that many people have money. Even if many people have money, it is unknown whether among the wealthy there are still speculative property buyers, or corrupt officials and 'house sisters' and 'house uncles' who own dozens or even hundreds of homes. Second, citizens of small and medium-sized cities moved to large cities and even megacities to buy houses, which is one reason why some cities have 'ghost towns' and 'empty cities' while housing prices in large cities remain firm. Third, local governments are boosting it. It is now an open reality that many governments rely on land sales for revenue and can hardly survive without the real estate market. They are likely to be insincere about regulation, so in practice they will laissez-faire and try every means to cover up. The fact is that if the government makes up its mind to do something, there is nothing it cannot accomplish. If the government truly takes tough measures to regulate housing prices, no one would believe that housing prices could still 'rise against the wind'.

The above analysis is only about current phenomena. The fact is that no matter what, one of the biggest objective realities may be overlooked, which is what the author calls China's population development situation determining that housing prices will sooner or later meet 'Waterloo'. Due to the long-term implementation of the family planning policy and the process of urbanization, China has now shown two situations: first, China's total population has not only been effectively controlled and is approaching its peak, but has also entered an aging era; second, the rural population has moved to cities with urbanization and has now reached a level where the transfer is almost complete. Except in developed areas, rural areas now basically have only the elderly, weak, sick, and disabled, with no young and middle-aged labor to transfer, which is also an important basis for the 'labor shortage' in cities and for experts saying that in terms of population transfer, China's urbanization is not a prelude but near its end.

The essence of whether housing prices rise is determined by supply and demand. The total population is already limited, and there is no longer much rural population to transfer, which will inevitably lead to relative stability in the population growth of large cities in the future, without the explosive population growth of recent years. As population growth enters a stable period, real estate developers are still building frantically for high profits, and the government is increasing the construction of affordable housing. How many more days can housing prices 'jump around'? This is something even without studying economics one can understand. Therefore, the CASS saying that housing prices will fall in the fourth quarter of this year is reasonable. Not only will they fall this year, but with economic stability and the current supply-demand situation, there will be no rebound in the future.

Editor: Wu Yue