Recently, China's four major real estate companies have taken the lead of lowering prices in the house market.

Recently, China's four major real estate companies have taken the lead of lowering prices in the house market.

Many other real estate companies are following them closely. Market experts foresee that more large-scale promotion will commence in March. This will be the second price reduction since the end of last October in China. Beijing-based economist Mao Yushi said, it will not be an overstatement to say that house prices are falling by 50%.

China's house market is under a big pressure of regulation policy from Beijing authorities. Released by National Bureau of Statistics data in February, shows the latest trend. These data shows that the price of new commercial houses in 70 large and medium-sized cities stopped rising in January. Among them were 48 cities with price reduction, and 22 cities holding the line.

In January, the land turnover decreased significantly in most of China's cities, and the land price fell steadily. The sales of large-scale housing companies fell sharply.

The total sales of 16 benchmark housing companies were under RMB 30 billion, less than half of that last January.

Standard & Poor's, UBS and other world financial institutions have warned, many Chinese housing loans are due in 2012.

As a result of weak sales and short-term debt pressure, some house companies will face a cash flow crisis in 2012.

Recently, Poly Group released 200 flats in Shanghai, with price fall from RMB 19,000 to 17,000 per square meter. Poly Group carried out a co-promotion in over 40 cities in China, with 20,000 flats involved.

Another leading house company, ZhaoShang DiChan, launched promotions for its 22 on-sale projects, and the price fall of some houses is up to 15%. In addition, many other large house companies also follow this pattern one after another.

Now various forms of promotional campaigns are carried out by Beijing, Shanghai, Shenzhen and other house markets.

Economist Mao Yushi recently pointed out some risks with China's economy. The biggest risk of this and next' year is the house market' bubble burst, as there are too many empty houses, thinks Mao.

What would a bubble burst of the house market mean? Mao Yushi said this is the continual fall of the house prices. He estimated that house prices will fall between 30% and 50%. Three years ago, the house price in Beijing fell that much. So he does not encourage people to buy houses now.

Mao Yushi: "There are several reasons behind the house market' bubble. The main reason is poor investment channels. Rich people have no place to invest, and go to buy houses. If there are good investment opportunities, they would not buy houses. Secondly, the income gap is too large. Rich people buy a lot of houses, but poor people can not afford even one. In addition, the land supply is insufficient. Why is the land so expensive? Because the state monopolizes it."

The Chinese communist authorities implemented the policy of house purchase restriction nationwide. However, different regulation policies were issued in 17 cities, including Beijing, Shanghai, Hangzhou, Chongqing, etc. And some cities, like Wuhu, Foshan and Chengdu had changed the policy too much. Thus they were called by the central government to stop, soon after issuing their policies.

Recently, Wen Jiabao and Li Keqiang stressed, that the house market regulation policy shouldn't be changed. Economist Qi Yanchen said, with the fixed asset bubbles-led growth, China's economy has paid a high price. And that the house bubble burst will be beneficial to the development of the real economy.

Qi Yanchen: "The decline is at least 60%, what kind of a market could this be? The real housing consumption' purpose is to buy a house for your family to live, rather than for investment or speculation. The government should not be greedy for money from the housing market. The land transfer payments account for more than 40% of the local fiscal revenue. Why? Because there are too many idlers in our government."

Economist Xie Guozhong also said, the house bubble burst will limit local governments' largest source of funding. The wasteful projects will be terminated. This will lead to slower growth and economic efficiency. The process of house price falling will make the wealth shift from the government to the citizens.

NTD reporters Zhou Yulin, Li Yuanhan and Li Ruolin