Consumers feel the bite of moves to cool price surges

PUBLISHED : Monday, 01 May, 2006, 12:00am
UPDATED : Monday, 01 May, 2006, 12:00am

Hu Jinquan, Construction executive

Government policies aimed at blunting real estate price surges have done little to bolster the health of the sector, but simply added an additional burden on consumers.

That's the view of Hu Jinquan, a contractor and construction supervisor from the Guangzhou Jianzhu Zhiye Construction Company.

Mr Hu said the cost of materials and construction was too small to be responsible for price increases in the market and blame for the price jump should be laid on the land auction system.

'No matter how low the initial price the local land bureau sets, or how many pieces of land they offer to the market, real estate developers will bid up the price so they can stock up on land,' he said.

'When there's no land available any more, they will sell it to consumers at a retaliatory price. Consumers are the only losers.'

Mr Hu said the tougher tax measures aimed at speculators had not worked as well as people expected and while 'local governments can get more income from the new taxes, the people buying houses will pay for it in the end.'

He said local governments were using income from real estate for community infrastructure, an investment that also was helping drive up prices.

'Housing is more expensive if it is surrounded by a better public environment. It's a snowball effect,' he said. Mr Hu said the only way to bring prices down was to increase development of less expensive accommodation and homes for people to rent.

'If the local government is behind this, it can fix a proper land price that's affordable for ordinary people. It's much more useful than any punitive tax measure,' he said.

'The profit margin for construction companies is almost the same, whether they're building cheap rental apartments or big houses. Land owners and estate developers are the winners from this wave of price increases.'