No concrete measures to rein in rising house prices

PUBLISHED : Saturday, 06 March, 2010, 12:00am
UPDATED : Saturday, 06 March, 2010, 12:00am

Soaring housing prices in the past year have made home ownership a more distant dream for most mainlanders and Premier Wen Jiabao's work report yesterday did little to address their hopes for fresh, concrete measures to rein in the boom.

Wen said the central government would 'resolutely curb the precipitous rise of housing prices in some cities and satisfy people's basic need for housing'. He emphasised four measures, all previously outlined in a State Council document issued on January 7, aimed at controlling housing prices this year.

Wen said the government would continue building large-scale housing developments for those on low income; continue to support the purchase of homes by end-users; rein in speculative housing purchases; and work to rectify and standardise the real estate market.

But Professor Wang Jianguo, of Peking University's Guanghua School of Management, said that 'except for the measure that would rein in speculative housing purchases, which could slightly affect housing prices, the rest are all useless'.

'How to solve the soaring housing prices is a common sense question because the prices depend on the relationship of supply and demand in the market,' Wang said.

If the government provided more land and encouraged those who owned more than one home to sell their excess properties, prices would decrease.

Nearly half of the proposals from the delegates to the Chinese People's Political Consultative Conference this year and many of those from National People's Congress deputies are about housing prices, with most calling for prices to be cut, especially for low-income housing projects, heftier property taxes and tightening up on loans to developers. Such a degree of unanimity is rare among those attending the two annual sessions.

Housing prices have topped public concerns in opinion polls since 2007, and the dramatic increases over the past year have only added weight to their fears.

The National Bureau of Statistics said last month property prices in 70 large and medium-sized cities rose 1.5 per cent last year, but that report attracted widespread ridicule.

In the first 11 months of last year, sales of commercial properties rose 53 per cent to 750 million square metres, and combined sales revenue was up 86.8 per cent at 3.6 trillion yuan (HK$4.09 trillion), indicating that average prices could have increased by at least 22 per cent during the period.

A new 100 square metre apartment in Shenzhen costs at least two million yuan and apartments in one Beijing real estate project are selling for more than 50,000 yuan per square metre. The market value of one project in Hainan exceeds the province's gross domestic product. The developer of the Clearwater Bay project says its total market value on completion could reach 200 billion yuan - Hainan's GDP last year was 164.66 billion yuan.

Similar 'property legends' emerge on the mainland every day.

When answering questions from people on the internet before the opening of the annual sessions of the NPC and the CPPCC this week, Wen said he was worried that housing prices might not be able to be reined in, even with the government's best efforts to curb them.

'All measures in the report are old, but it is the first time for the government to emphasise its 'resolute' attitude,' said Yi Xianrong, an economist at the Institute of Finance and Banking, Chinese Academy of Social Sciences. 'The influence of building more low-income housing projects on housing prices is quite limited, but it is the government's responsibility to do it.'

Prime concern

Nearly half the proposals in the annual sessions are about housing prices

Sales revenue figures show housing prices last year could have risen by: 22%