Exorbitant prices of flats must be cut, official says
Prices of flats in China, which can be as much as 18 times the annual income of an average family, are exorbitantly high and should be reduced substantially, a construction official says.
Xie Jiajin , director-general of the Construction Ministry's real estate industry department, said after a housing conference in Hong Kong yesterday a major problem plaguing the industry at a time when the government was encouraging home-ownership was high property prices.
Home prices should be slashed by two-thirds to equate with six times the annual income of an average family.
She said prices should fall to about 50,000 yuan for a basic 645.8 sq ft flat, with two bedrooms, living area, a bathroom and a kitchen.
China is giving concessions to citizens to buy the flats that they live in.
'But selling these flats according to the market rate is not possible because the people's wages are not high,' Ms Xie said.
She said another problem was that the country's mortgage industry, which could boost consumer buying power, was still immature.
The government is also raising the rental level for housing in support of the drive to encourage people to buy flats.
The monthly rent in Beijing has been increased to 1.30 yuan per square metre from 50 fen in the middle of last year. 'By 2000, the rent for every square metre should be between 3.80 and 4.50 yuan,' Ms Xie said.
Monthly rents vary from city to city. Topping the list is Beijing, followed by Guangzhou and Shanghai.
Ms Xie said rental income was insufficient to foot the bill for repair and maintenance work.
Increased rents would put the government in a better financial position to do the tasks.
'Rental income now only covers about 20 per cent of total repair costs,' Ms Xie said.
She said increasing rents was not a straightforward matter and the rental level must be raised gradually according to the increase in citizens' wages.
