Opinion / You Nuo
Housing must not be left solely to the market
By You Nuo (China Daily)
Updated: 2006-05-22 06:00
A check of Saturday morning's Internet BBS columns turned up a large
cluster of opinions about the housing market.
That's not surprising given that the most important development for the
Chinese economy last week was surely the State Council decision, adopted
on May 17, to slow down urban house pricing.
It is called the State's "six points," a follow-up of the "eight points"
that the Chinese cabinet adopted about a year ago. Both decisions were
designed to provide guidelines for the so far unruly property market.
The first comment I saw on sina.com was: "Whoever allows us to afford our
homes, our medical care, our education and our children's jobs, we'll
elect to be the king."
This was followed by: "I agree, except for our children's jobs these are
for them to grab for themselves." Despite the playful wording, these
comments contain deep logic.
They show where the demarcation is in people's hearts, between the market
economy and government responsibility. And housing is one of the things
that many citizens aren't ready to give up completely to the market.
The central government's "six points" of last week was a response to this
sentiment, based on the fact that in the housing markets of some big
cities, prices have continued to skyrocket, despite its "eight points"
policy of last year.
According to Chinese-language press sources from January to April, of the
70 large cities, 11 showed an average price increase of more than 7 per
cent year-on-year, and three, including Beijing, showed an increase of
more than 10 per cent.
In 16 cities, housing units on offer are larger than 120 square metres in
average floor space, not the kind preferred by medium-income earners the
office and factory-workers and small merchants. All the unsold units are
larger than 150 square metres on average.
At the same time, unlawful and deceitful practices on the part of
developers and sales agents are still widespread. This is evidence enough
that, at least in these cities, developers on the whole have failed to
win much public support since the introduction of the eight points.
Is it possible for developers to manage themselves in a way that doesn't
set them apart from the rest of society? Can they ever earn trust for
their industry?
Government advisers are standing right by calling for differentiated
mortgage policies and interest rates when more low-price units are built.
The bigger buyers may be asked to pay higher taxes, bigger down payments
and higher interest.
It is time for China to find more effective ways to regulate the housing
market. There should not be just a system of temporary points, but an
overall programme at least for large cities near the coast, especially
the development of their residential housing.
For instance, it would not be far-fetched for cities like Beijing to have
some satellite towns in its previously impoverished nearby rural areas,
strictly reserved for wealthy out-of-town buyers.
If they want to be closer to the city and to its international
facilities, let them have the roads if they want to pay for them. But
they should not be allowed to compete for inner-city housing.
Press figures show that in 2005, property investment in five places
Jiangsu, Guangdong, Zhejiang, Shanghai and Beijing accounted for more
than half of that across the Chinese mainland. Buyers from out of town
made up 39 per cent of all property buyers in Beijing, and 23 per cent in
Shenzhen, a city in Guangdong.
This is enough of an indicator of where the money has been flowing, and
along with it the nation's private and corporate house buyers and the
entire nouveau-riche class.
Where to buy a house and to set up one's business is, of course, a
private decision. But judging from the limited land supplies in existing
large cities, and the social consequences of many urban medium-income
earners being unable to afford their own housing, this should not be an
area entirely left to the mercy of market forces.
In the inner city, especially where the convenience of a public transport
system exists or is planned, permission is only issued for small housing
units designed for its office and factory workers.
In the crowded financial district, the municipal government may even own
some buildings (but not provide their management) so as to collect rental
money for meeting the constant demand for ultra-modern roadworks and
traffic management.
Email: younuo@chinadaily.com.cn
(China Daily 05/22/2006 page4)
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