Ending curbs won't unleash housing demand

So far, only six cities in China have abstained completely from removing or easing earlier restrictions on home sales. This select bunch includes metropolises like Beijing, Shanghai, Guangzhou and Shenzhen. Meanwhile, most lower-tier cities have lifted previous curbs in an attempt to shore up demand.

After a decade of breakneck growth, the supply and demand balance in China's housing market has been shattered. On the one hand, there are fewer young people these days who can serve as potential new home buyers; yet on the other hand, supplies of houses continue to grow. Recent drops in housing prices and transaction numbers reflect this mathematical reality and strongly suggest that a period of adjustment is already underway.

Winding down earlier restrictions won't make much difference now. To bolster sales and foster sustainable growth, more market-based measures are needed. What many prospective buyers now require are lower barriers to mortgage loans. The housing market can hardly recover without giving real buyers greater access to credit. The government can also play a part in fostering demand with tax and borrowing policies that satisfy the needs of such buyers.