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Bring down house prices

(China Daily)
Updated: 2006-05-15 11:48

Authorities should make every effort to ease skyrocketing house prices in the interests of home-buyers, said a signed article in the China Economic Times. An excerpt follows:

According to reports, Lin Haokun, director of the department of land and resources in Guangdong Province, suggested that people wait three years before they purchase a house if they are not in urgent need of a new one. Lin said that current real estate prices are too high and they would return to a normal level as more land is supplied.

Lin's remark is a reminder of a number of citizens recently calling on people not to purchase housing in protest against the high prices. These common people cannot influence the real estate market; instead they choose to save their money rather than shouldering heavy mortgages.

But Lin's pledge, similar to Zou's call, is quite questionable given that he is an official from the land and resources department, whose major responsibility is related to the real estate sector.

Maybe his remark could be interpreted as a sign of the authorities' perplexity at skyrocketing house prices.

As a matter of fact, the real culprit behind the high prices is the mismatch between demand and supply for housing most customers could not afford the high-end or luxury houses that are fervently promoted by developers.

Such a mismatch is also the result of the costly land that developers obtain from the government, which makes it less profitable to develop less expensive houses. The interest rate of bank loans is also so "attractive" that many customers would not think twice before applying for a mortgage.

Over-speculation is also responsible for rising house prices.

So Lin and his fellow officials should take active steps to curb the rise in house prices instead of issuing passive protests.

It is in the interests of home-buyers that authorities take the necessary measures to bring down house prices so that consumers can afford houses right now instead of waiting for three years, five years or even a decade to buy a house.