The housing market now a systemic economic problem

Governments of China's four first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen adjusted their house purchase restriction policies before Spring Festival in February. After the adjustment, the biggest benefit is to reveal changes of the real demand of the market. After this round of restrictions' ease, more sellers than buyers are seen in the market, a situation that will take several months to reach a relative equilibrium before the market regains confidence.

As long as the government lets go of the previous restrictions and return to the normal process of market trading, the market will gradually move forward. As long as the economy grows, people's incomes and jobs will increase, the demand for housing will increase, which is not something to worry about. The government should fully liberalize purchase restrictions, because now it is not only necessary to repair the market, but also to repair the system, and establish a dual-track system of both indemnificatory and market-orientation.

The release of purchase restrictions will not trigger a new wave of investment, making the instability of the property market again. The housing market is now a systemic economic problem. Therefore, even if the purchase limit is fully lifted, the market may still decline until it stabilizes and then rises again.