As a special commodity, residential property possesses both use value and investment value. Therefore, clients can be divided into living oriented type and investment oriented type from the demand aspect. In 2015, the sales value of the residential property reached CNY 7,275.3 billion in China with an increase of 16.6% YOY.
In China, the government possesses the ownership of all land, so the land resources show the scarcity. The government sets strict restrictions on the use of land. Only the residential real estate development enterprises with certificates for the right to the use of land, permits for the planning of construction projects and construction permits can implement the advance sales of commercial houses without optional change. Thus, the land resource barriers are very high.
With the slowdown development of China’s macro economy, the main target of policies is to support the structure optimization and destocking of residential property development industry. Chinese government continuously loosened the monetary policy to stimulate the demand for real estate and promote the development of residential property development industry. Chinese government takes active measures to reduce the cyclical fluctuation in residential property development industry and support the optimization of industrial structure and destocking of residence. People’s Bank of China cut the interest rate five times and reduced the deposit reserve rate four times in 2015 alone. Repeated decline of interest rate reduced the purchase cost, which promoted the development of residential property development industry.