Action is needed on homes database

PUBLISHED : Sunday, 01 December, 2013, 5:38am
UPDATED : Sunday, 01 December, 2013, 5:38am

One of the key indicators of domestic wealth and social equity is housing. It is therefore important that China has a database of home ownership, the basis of a system of secure property title. But that remains a remote prospect after the Ministry of Housing and Urban-Rural Development missed its own deadline of the end of June for consolidating home ownership data from 500 cities into a nationwide system. As a result, the cabinet has put the Ministry of Land and Resources in charge of registering the ownership and use of immovable property, including land and housing.

To make a difference, the land ministry will have to succeed - where the housing ministry failed - in overcoming the biggest obstacle to the compilation of a database. That is local government, which exploits the lack of one, supported by vested interest groups such as rich families who have hidden their wealth behind fake identities in homes across the country.

Fighting corruption is only one reason the central government wants a database. When it is completed, Beijing will be able to target curbs on property speculation more precisely and assess fair taxes on families who own investment properties on top of the space they need to live in.

Developers and housing market experts say that eventually the effect would be to make homes more affordable and ease concerns about a property bubble and the consequences should it burst. However, as Shanghai E-House R&D institute deputy president Martin Ding said, local governments do not want the central leadership to know "too much" about home ownership. They rely heavily on land sales for revenue and their financing vehicles use land as collateral for bank loans. If home prices fall, they do not have a big margin for safety.

The drive to complete the database is long overdue if the authorities want clarity about housing demand and affordability. The mainland has never conducted a property census, which makes it harder for policymakers to balance supply and demand for homes.

The cabinet has also called for the sharing of database information among government departments and public access to it. This would help safeguard a healthy market for the biggest investment most people will make in their lives. Curbs such as home purchase restrictions and higher down payments have so far failed to rein in house price inflation, particularly in the first-tier cities: Beijing, Shanghai Shenzhen and Guangzhou.