In the article, Yi pointed out that after 10 years of development and soaring housing prices, the domestic real estate market is entering a period of cyclical adjustment. The current price decline is a trend that no one can change and it is inevitable for the development of the real estate market. Given this, attempts by local governments to rescue the market will have no impact, he wrote.

He noted that the National Bureau of Statistics data indicate that from January to July, investment in real estate development nationwide surged 30.9 percent compared with the same period last year. Prosperity in domestic real estate development has not changed, and the inflow of capital in particular has grown very rapidly, Yi said.

Since 1998, the government has adopted many measures to vigorously support the real estate market, fostering its quick development, Yi said. The government intended to promote the sound development of the real estate industry, but these measures prompted real estate developers to undertake large projects with small investment, hoard land, sell homes reluctantly and repeatedly drive up housing prices. As a result, these measures have led to skyrocketing housing prices, the irrational development of the real estate industry and passivity from the government, Yi said.

Yi said under the country's current economic conditions, tightening the money supply is an inevitable choice. Only by doing this can the government cool down the overheated economy and normalize the market. In such an environment, the government should not adopt any measures to rescue the estate market, he said. The current status of China's real estate market in particular is a rational downturn from the previous period of overheated development, and the housing price decline has not any impact on the country's social, economic and financial systems, Yi said.

Liu from the Institute of Real Estate Studies at Tsinghua University also believes that the present decline in housing prices is normal.

"The Chinese housing market will experience quite a long period of adjustment so as to digest price bubbles formed in the previous two years and return to a level in line with the overall economic situation and people's paying capacity," Liu said. "If the macroeconomy steps into a stage of slow growth, the adjustment period for the housing market may be prolonged."

A survey conducted by Soufun.com in Guangzhou, Beijing, Shanghai and Shenzhen in July showed that among more than 8,000 respondents, 87.5 percent opposed an effort by the government to "rescue the market." Thirty-eight percent said they believed that "housing prices are not falling to a reasonable level, and the government should strengthen its regulation efforts."

Companies cope

To cope with the downturn in the market, real estate companies-many of which are listed on the country's stock exchanges-have tried to help themselves while they appeal to the government for a bailout.

He Zhitao, General Manager in the Brand Management Center of Poly Real Estate Group Co. Ltd., said that in the second half of the year, the company would increase its promotions of houses in the central areas of major cities, which would effectively alleviate sales pressure and enhance its ability to handle market risks. The company's semiannual report shows that the group lists macrocontrol, growing costs and market adjustment as the three major risks it faces in the second half.

Longfor Group, a real estate developer, is increasing the efficiency of its cash flows by speeding up the completion of new projects, said Li Jian, a marketing department employee. He said doing this would be a way for the group to cope with the market adjustment. In the second half, the company plans to focus on the middle and high-end real estate markets and will adjust its pricing strategy according to changes in the market, he said.