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Local officials ignore call to lower sky-high prices of housing
By Wan Lixin |
April 4, 2011, Monday
|
Print Edition
Print Edition
ANYONE familiar with China's housing problem - whether government officials, real estate developers, home buyers or home owners - is watching closely which way China's sky-high housing prices threaten to move.
The price in big cities long ago reached a level that defied the wildest imagination, and persistent government reluctance to effectively address the problem has already seriously undermined government prestige.
Since last April, the central government has announced a series of measures aimed at cooling the red-hot market. The measures were generally believed to be the most stringent to date, and led to stagnating sales for a few months.
But by the end of the year, real estate developers began to stage fresh scenes of panic buying again (one of my colleagues had to rush to a suburban sales office at midnight to reassert his claim to a suburban apartment).
The central government weighed in late January by announcing a fresh set of measures. The standoff between buyers and sellers set in again.
Among other things, "local people's governments" are required by law to "reasonably set housing price control targets for the year, in view of local economic growth, per capita income growth, and local residents' ability to pay," by the first quarter.
Wrong signal
By March 31, more than 60 local governments had published their targets, and with one notable exception, all are foreseeing home price growth at about 10 percent.
One city even published a 50 percent price growth target because last year the price grew by 50.5 percent. Around 90 percent of cities simply chose to miss the deadline.
Clearly all local people's governments are availing themselves of this opportunity to send a strong signal to the people: the prices will go up, not down. Buy now, or repent later.
Although some naive reporters are still pestering meteorologists as to whether spring has come to the city, "real estate's spring has arrived," a well-known evening paper announced.
The local Beijing government was the only city that declared it would stabilize or "lower" its new home prices in 2011. But according to an analysis carried on www.caing.com, there is more to "lower" than meets the eye.
First, in working out a lowered price, the city government would, for the first time, include the markedly underpriced affordable housing.
As the construction of affordable housing has been stepped up in the past couple of years, such housing would significantly lower the price.
An even trickier issue is that since January, the Beijing statistics bureau no longer publishes its own price changes. The job is entrusted to the National Statistics Bureau, which is not in the habit of publishing breakdowns of prices for individual categories such as villas, flats, or affordable housing.
Costs of growth
In other words, it will be well-nigh impossible to assess real changes in prices.
Given these conditions, what was considered at first glance to be the most ambitious and stringent housing price control system is being reduced to another farce.
Of course, it could still degenerate into a farce even if local governments all published aggressively lowered price targets, but that at least would show they retained some respect for the sentiments of the people.
One of the reasons for this deplorable condition is that the central government has not done enough to wean local governments from their dependence on land sales.
And as long as economic development is still considered a core interest of government, we can continue to see growth extracted at all costs, sometimes even stained with the blood of those who refuse to be cheated of their land.
It was reported in Xinmin Evening News on March 31 that a heavy-weight real estate developer would strew Dongtan in Chongming Island with plush villas.
The area is best known as a wetland sanctuary for migrating birds.
The Oriental Morning Post reported the next day that the number of birds wintering in Dongtan, now totaling 150,000, has been declining steadily by around 10,000 annually for the past five years.
Obviously when it comes to growth, not only birds, but some people are becoming increasingly expendable.
The price in big cities long ago reached a level that defied the wildest imagination, and persistent government reluctance to effectively address the problem has already seriously undermined government prestige.
Since last April, the central government has announced a series of measures aimed at cooling the red-hot market. The measures were generally believed to be the most stringent to date, and led to stagnating sales for a few months.
But by the end of the year, real estate developers began to stage fresh scenes of panic buying again (one of my colleagues had to rush to a suburban sales office at midnight to reassert his claim to a suburban apartment).
The central government weighed in late January by announcing a fresh set of measures. The standoff between buyers and sellers set in again.
Among other things, "local people's governments" are required by law to "reasonably set housing price control targets for the year, in view of local economic growth, per capita income growth, and local residents' ability to pay," by the first quarter.
Wrong signal
By March 31, more than 60 local governments had published their targets, and with one notable exception, all are foreseeing home price growth at about 10 percent.
One city even published a 50 percent price growth target because last year the price grew by 50.5 percent. Around 90 percent of cities simply chose to miss the deadline.
Clearly all local people's governments are availing themselves of this opportunity to send a strong signal to the people: the prices will go up, not down. Buy now, or repent later.
Although some naive reporters are still pestering meteorologists as to whether spring has come to the city, "real estate's spring has arrived," a well-known evening paper announced.
The local Beijing government was the only city that declared it would stabilize or "lower" its new home prices in 2011. But according to an analysis carried on www.caing.com, there is more to "lower" than meets the eye.
First, in working out a lowered price, the city government would, for the first time, include the markedly underpriced affordable housing.
As the construction of affordable housing has been stepped up in the past couple of years, such housing would significantly lower the price.
An even trickier issue is that since January, the Beijing statistics bureau no longer publishes its own price changes. The job is entrusted to the National Statistics Bureau, which is not in the habit of publishing breakdowns of prices for individual categories such as villas, flats, or affordable housing.
Costs of growth
In other words, it will be well-nigh impossible to assess real changes in prices.
Given these conditions, what was considered at first glance to be the most ambitious and stringent housing price control system is being reduced to another farce.
Of course, it could still degenerate into a farce even if local governments all published aggressively lowered price targets, but that at least would show they retained some respect for the sentiments of the people.
One of the reasons for this deplorable condition is that the central government has not done enough to wean local governments from their dependence on land sales.
And as long as economic development is still considered a core interest of government, we can continue to see growth extracted at all costs, sometimes even stained with the blood of those who refuse to be cheated of their land.
It was reported in Xinmin Evening News on March 31 that a heavy-weight real estate developer would strew Dongtan in Chongming Island with plush villas.
The area is best known as a wetland sanctuary for migrating birds.
The Oriental Morning Post reported the next day that the number of birds wintering in Dongtan, now totaling 150,000, has been declining steadily by around 10,000 annually for the past five years.
Obviously when it comes to growth, not only birds, but some people are becoming increasingly expendable.
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