Top scholar proposes massive home buyback

Potential customers look at a model of a real estate development in Yichang, Hubei province.[ZHOU JIANPING / FOR CHINA DAILY]

The Chinese government should spend big on buying back a massive glut of homes in third- and fourth-tier cities and assign them to low-incomers, Yao Yang, dean of the National School of Development at Peking University, told China Daily in an exclusive interview.

"Now is the best time for the government to buy back (because of the market downturn in third- and fourth-tier cities)," said Yao, who often consults the government on economic issues. "The government should bargain for a good discount with developers, and offer these idle homes to low-income earners as public rental flats, or as compensation to those displaced by demolition or renovation of dilapidated urban residences."

This year’s economic plan, outlined in the Government Work Report, said that China will ramp up subsidies to encourage migrants to seek public housing on their own, instead of building massive amounts of homes and assigning units to applicants. The government will support the development of the rental market.

During January-February, unsold homes in China grew 15.7 percent to reach 739 million square meters, according to the National Bureau of Statistics. 70 percent are in third- and fourth-tier cities.

Commenting on the hike in home prices in first-tier cities and worries of a bubble bursting, Yao said he saw no sign of an "immediate bubble burst". Even if a bubble did burst, it would hurt wealthy people in these cities, who could afford the skyrocketing prices there.

"I see no solution (to a price hike in first-tier cities). Those who can afford the prices, they should bear their own risk," Yao said. "For the general public, more financial education is needed to warn them against panic buying. They should not be fooled by the bluff of agents."

He said low-income earners in first-tier cities will rely on governments to own a home.