The Policy Impact On The Real Estate Industry

1163 Words Oct 31st, 2014 5 Pages
The Policy Impact on the Real Estate Monopolist in China
Just a couple weeks ago, many cities in China have begun to loosen the restriction. In China, 2010, Chinese central government issued a housing restriction policy, which limited families’ purchase of housing and commercial loans for the real estate companies. It supposed to control the demand of the real estate, and lower the housing price. However, after following this policy for 4 years. The housing price still keeps growing. Many small real estate companies were heavily effect by this policy. Some of them had exited this market. However, the financial statements from several big real estate companies in China indicated that these companies were making more profit and experiencing speedy growth in scale.
The monopoly in the real estate industry is well known in China. This problem is cause by many factors.
The first one is the entry barrier of the real estate industry. In recent years, the entry barrier of real estate industry has increased. In May 2004, the Chinese government has increased the amount of required capital for real estate companies, which means the companies that try to enter the real estate market must have a certain amount of capital. Even new companies can enter the market, there are the government restrictions on commercial loans for the real estate company, which means it is difficult of new entrants to obtain additional funds from financial institutions. With limited strength in finance, it is…
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