Analysis: The CCP’s Calculations Behind “Stabilizing the Property Market”

The Chinese authorities have been vigorously promoting the stabilization of the real estate market, but residents in many cities across the mainland continue to express dissatisfaction as the property market remains unstable and prices continue to plummet uncontrollably. Most recently, Nanjing has announced the comprehensive cancellation of property sale restrictions, sparking widespread attention from both the market and the public. Nanjing had previously implemented sale restrictions where buyers had to hold onto properties for a certain period after obtaining ownership certificates before being able to resell them. With the sustained sluggishness of the property market, Nanjing’s recent policy adjustment has provoked deep discussions about the government’s intentions.

Blogger “Huī Hú Shuō Fáng” analyzed the calculations behind the Chinese Communist Party’s “stabilizing the property market” policy using Nanjing’s complete removal of property sale restrictions as an example. He pointed out that the background for this policy shift lies in the current weak state of China’s real estate market. In many major cities, especially after 2024, property prices have dropped back to levels seen over a decade ago, with a surplus of new and resale properties leading to low transaction volumes. In this scenario, Nanjing’s decision to eliminate sale restrictions aims to release the previously restricted housing supply into the market. On the surface, this decision appears to be aimed at improving the supply-demand relationship in the market, preventing further oversupply, and reducing pressure on the resale market.

However, he noted that the government’s true intention is not solely to stabilize property prices but rather to stimulate transaction volumes to maintain the “existence” of the property market. In other words, the core objective of the Nanjing municipal government is to increase market transactions to achieve the effect of market stability. The so-called “stabilization of the property market” by the government does not specifically target stabilizing property prices, which explains why the focus of property market policies has consistently been on transaction volumes rather than price controls.

With the removal of sale restrictions, homeowners who purchased properties after the introduction of the 2017 restriction policy can now reintroduce their properties to the market regardless of demand. However, for most homeowners who bought at peak prices initially, selling their properties now would result in significant losses. For these homeowners, selling properties without incurring losses is impossible. The only option is to reduce prices, contributing to further declines in resale property prices. This process not only leads to losses for homeowners but also triggers a chain reaction in the entire market, causing further downward fluctuations in resale property prices.

So why would the government choose to lift sale restrictions to allow more properties to enter the market despite the resulting price decline? The blogger believes that this policy is a temporary measure responding to the current dilemma. Currently, market demand is weak, and the government faces significant fiscal pressure. By boosting transaction volumes to stabilize the property market and reduce risks faced by financial institutions like banks, the government aims to maintain the operational efficiency of related industries to stabilize the socio-economic situation.

While such a policy may accelerate price declines, from the government’s perspective, the stability of the property market and the resurgence of transaction volumes are paramount. For homebuyers and homeowners, this policy undoubtedly poses the risk of further property price declines, but for the government, as long as transaction volumes increase, the property market is considered stable.

Furthermore, financial influencer “Liú Sū Wǎn Qíng” recently published an article analyzing that the core objective of the Communist Party government in stabilizing the property market is not to preserve property prices but to maintain GDP growth. Based on the government’s economic goals, China’s economic growth target for 2025 is 5%, and the real estate industry must contribute 6% to GDP. This means the real estate sector must achieve sales of 8 trillion yuan to ensure the economy remains unaffected. Even with significant price drops, as long as market transaction volumes are sufficient, developers can continue to maintain GDP growth by selling a large amount of properties, a reality that 90% of people fail to comprehend behind the shocking truth of the property market stabilization efforts.