Land+Sales+plummet+in+Shanghai+by+Veronica

//**REMEMBER: DO NOT SUMMARIZE THE ARTICLE!!!**//

Title of extract: Land sales in Shanghai plummet

Source of extract: http://www.shanghaidaily.com/article/?id=495778&type=Business

Date of extract: March 6th, 2012

Brief explanation (10-15 sentences maximum) The economic theory presented in this article is the concept of supply and demand. It mainly talks about the decrease of demand for houses in Shanghai China. In the first two months of this year, the sales of houses in Shanghai almost halved compared to the monthly transaction recorded in 2011. Media says the reason for a drastic decrease in sales goes back to the government's tightened regulations in housing speculation. As a result, real estate agencies have been panicking because decrease in sales means decrease in company revenue. A decrease in company revenue means a decrease in salary or even risk losing their jobs. An important factor to take into consideration is that the sales of housing excludes public developments. This means it is purely apartments and houses that people buy to live in or other uses. Now what regulations the government tightened was not mentioned in the article, however many factors could've triggered this decrease. Taxes, policies, years of rightfully owning the property before they can be sold to others, and many more. All these factors are plausible reasons as to why land sales plummet this year.

Supply: Quantity demanded for a market Demand: Consumers' quantity demanded for a certain product Consumer: Person who purchases goods for its own personal use. Producer: person/company that supplies goods Market: a regular gathering of people for future purchases and sales of provisional stock. Sales: Quantity sold Transaction: A instance of buying and selling something.

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Evaluation Usually when real estate companies build properties, they're watching for the right time to either increase or decrease their plans for new properties. Sometimes its when more and more people are buying houses, so a company will begin building new compounds in order to go with the trend. Sometimes the sales drop because government regulations force it to drop. It's not necessarily government not allowing companies to build new properties. It's rather the regulations within the field such as how many buildings to build. and if the company can't build as many properties, they have to jack up the price in order to maintain their revenue. The increase in price can ultimately decrease demand because the consumers no longer want to pay that amount of money for the same property anymore. Sometimes the government thinks that having regulations can help monitor the real estate market and not let it go too crazy. For example having regulations for how long a person has to own the property before they sell it to second hand, because they want to prevent people from jacking up the prices continuously. Currently if land sales continue to plummet, people might come for the cheap properties and sell them for higher prices. This will continue to go on until the prices become too high, and people are no longer buying them because they don't have money. Especially the lower class that don't have enough money to buy the houses. In the end, the supply and demand of housing will continue to be shifting.