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Booming real estate sector puts China at crossroads in 2010

(Xinhua)
Updated: 2010-03-02 10:49

More courage needed

However, there is still a long way to go as China's local governments rely much on commercial housing and land sales, their biggest source of revenue in recent times.

The revenue from land transfers in China's 70 large and medium-sized cities totaled 1.08 trillion yuan in 2009, up 140 percent from a year earlier, according to China Index Academy, a real-estate research institute.

"To ask local governments to build more affordable houses and suppress housing price rises is really asking them to cut off their biggest source of revenue, as housing sales account for about 40 to 60 percent of total revenue," says Bao Zonghua, former chief of the Ministry of Housing and Urban-Rural Development's policy research center.

Courage is needed to delink local economic growth from the booming real estate sector, but no matter the bubble has to be stopped sooner or later, said Peng Zhenqiu, Shanghai city counselor who has taken part in research on urban housing.

"For the traditional Chinese people, owning a house or a flat means security, not simply a financial investment," he said.

Peng forecast that deputies and advisors at the upcoming two sessions would put forward good proposals to make housing more affordable in the future.

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