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China’s Real-Estate Wrongs

BEIJING – China’s real-estate sector has been a source of serious concern for several years, with soaring property prices raising fears of overheating in the housing market. But, with price growth easing, it seems that the government’s campaign to rein in property risk is finally taking hold. The danger now is that the housing market will collapse – bringing China’s economic prospects down with it.

In its effort to control rising housing prices, China’s government has pursued nine distinct policies, not all of which have served their purpose. Though policies like limits on mortgages for first-time buyers and minimum residency requirements for purchasing property in a first-tier city like Beijing or Shanghai helped to ease demand, supply-side tactics, such as limiting credit to real-estate developers and imposing new taxes on property sales, have proved to be counter-productive.