While inspecting low-rent and public-rental housing sites in Beijing on August 13, Vice Premier Li Keqiang said China will continue to increase the supply of affordable housing for low-income families in order to consolidate the effects of the recent regulation.

Vice Premier Li Keqiang inspected low-rent and public-rental housing sites in Beijing on August 13. [Rao Aiming/Xinhua News Agency]

Li also pledged to promote the stable and healthy development of the real estate sector and to improve living conditions of low-income residents.

His words certainly dealt a heavy blow to the scholars, experts and real estate developers of the China Real Estate Association (CREA), who don't want further regulations.

Zhu Zhongyi, vice chairman of the CREA, said on August 12 at the Boao Real Estate Forum that they had suggested the central government not introduce more regulations.

Real estate developers, scholars and experts vented their dissatisfaction at the current real estate regulations at the forum. They seemed to attempting to turn back the wheel of history and the CREA's suggestion was the declaration of their movement.

Their opposition raises questions, and China needs to reevaluate the status of the real estate industry within the current context of its economic development. Is it the backbone of China's economy? Or is it an industry guaranteeing people's basic living conditions?

For many years, a number of people believed that housing prices would keep rising. They thought that roaring prices are the symbol of real estate development, but it seems that development and the importance of the real estate sector are ignored once housing prices stop skyrocketing. It's strange why rising prices are seen as the symbol for real estate development. This is not the case in any other sectors or any other countries.

We cannot let things continue like this. How can prices only keep rising? The bigger the housing bubble expands the worst the consequences will be when it bursts.

The contributions to the economy made by the real estate sector are not the soaring prices but the sales volume. Rising prices will only dampen demand. A large quantity of empty houses and hoarding land only help speculators and real estate developers make a fortune overnight, without doing any good to the economy or society.

Once housing prices drop to the level where people can buy a house after working for a few years, it will surely increase their buying capacity. And subsequently it will help promote the development of related sectors, such as the building materials sector, glass, steel and electric apparatus sectors.

Actually this was what Li's words signaled. He expressed the government's determination to regulate the housing market and curb runaway housing prices.

(The post was first published in Chinese and translated by Zhang Ming'ai)