房产去库存Destocking Housing Inventory

China’s surplus of homes was one of the hottest topics at this year’s Central Economic Work Conference.

A pillar of the national economy, real estate has always been of acute public concern. In the government work report released during this year’s NPC and CPPCC sessions, real estate was mentioned several times; many different policies in different cities were discussed, and for many locales, it was deemed appropriate to cut housing inventory to promote stability in the real estate market. The market needs a housing system that encourages both renting and purchasing.

Generally, “unsold homes” refers to housing under construction and planning in addition to completed buildings. According to the National Bureau of Statistics data released on January 29, 2016, unsold home inventory hit a record 718.53 million square meters, enough living space for 240 million people based on the average per capita living space of 30 square meters. As construction projects have outpaced home sales, inventory has increased continuously every year.

Due to weaker demand and surplus inventory, China’s housing market has experienced a downturn. Its contribution to economic growth has fallen to an all-time low. The destocking of excess real estate inventory drew attention during the two sessions and has become a highlight of real-estate market work in 2016. The Central Economic Work Conference listed destocking the housing market as one of the “five economic missions” of this year.

The Central Economic Work Conference offered several solutions to reducing numbers of excess homes. One solution would transform migrant workers into “new urbanities” with full-fledged rights, which would boost housing demand. The second solution is to encourage investors to buy property to rent and promote the development of the rental housing market. The third requires property developers to adjust their marketing strategy and drop prices. Another plan is to increase the intensity of real estate enterprises and boost the market through large-scale operation. Others argued to revoke obsolete, restrictive home-buying measures.

The core solution to reducing unsold homes is to stabilize housing prices to stimulate demand.