The price of real estate in Shenzhen has gone through a significant change, with a percentage of $\frac{2000}{55000}$. But with the process of economic recovery, such an increasing trend can show the coming of the next upsurge of real estate. This year, the government has printed more money than that in 2008 to stimulate the economy. And just as before, large amounts of money will go into real estates and other critical industries. The booming of investment and development of these fields can undoubtedly make other fields progress and shed the recession as well, which is good for overall recovery and make the increasing rate of GDP looks good on the world ranking. Therefore, in spite of an imbalance of supply and demand, which would make the price lower, the potential of rising price is much greater than that of decreasing price.
The price may go up for the following reasons:
The country needs real estates and relevant investments to stimulate the economy to lead the recovery of the economy in the world.
investors now have a huge amount of money and they need to find somewhere to invest(the current situation is that more money faces less goods), and comparatively, real estates are more stable than other fields. Besides, the potential in some newly prosperous cities has not been fully exploited. That is to say, the price’s still not reaching the upper limit. For example, in Xi’an or Chengdu, now the average price is about 16,000. But that price in developed cities like Beijing, Shanghai and Shenzhen is about 60,000 or even more. So when investors from these cities come over to Xi’an or Chengdu, they will stimulate the price. In some more developed districts in Xi’an, with better infrastructure, the price could even go up from 20,000 right now to 40,000 or even 50,000 I guess. And such a price is not a big deal to these investors. Some people may blame these real estates for astronomical prices, but that does not totally make sense because there must be real estates in some districts which appeal to elites rather than ordinary people. And there are already many people in Xi’an or Chengdu with enough income to buy these houses.
After nearly 8 years’s political struggle, leaders already have overall power in the whole country. Their group has the power and control in the central committee and the state council and most of the provinces. But the group doesn’t have power in every aspect, especially at the provincial level. So letting provincial states make profits in real estates could also strengthen their team’s power. Enhancement in economic power can improve their political power. It is critical especially before the coming election in 2023.
In some newly prosperous cities, there is still room for prices to go up.
Whether the price will go up or down depends on the comparison between strengths of going-up factors and going-down factors. Going-down factors mainly come from supply glut and the governments’ determination to handle this problem. However, compared to obtaining steady and stable political positions by strengthening both economy and political power, handling the real estate problem is not that urgent and important. Besides, the government isn’t doing absolutely nothing. If ordinary people cannot afford it, then why not some people buy it and share the ownership together. If that still cannot work, then why not rent a house which may be poor in quality at a low price. Anyway, there must be some ways for ordinary people and poor people to get a house. So the conflicts between elites and the poor are not that severe.
Overall, I think the potential to go up overwhelms that of going down. And maybe no sooner than the spring in 2021 and no later than autumn in 2022, the price will go up.
Update 2020.12.21：
Critical question 1: Whether regulations nowadays can actually control the rising of price?
Critical question 2: If the price rises, who benefits more, the leaders or their opponents?
