Economy

Housing proves hot button issue

By Hu Yuanyuan (China Daily)
Updated: 2010-03-13 08:06

BEIJING - Any topic related to property prices is a hot topic of discussion among Chinese people at the moment, and members of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) attending their annual meetings are no exception.

Nearly half of the proposals to the NPC and CPPCC sessions were about different ways of curbing soaring property prices and addressing the housing difficulties faced by low-income families. The most eye-catching of these was a call for a further reform of the country's housing policy.

Of the two proposals submitted this year by Zong Qinghou, chairman of leading beverage firm Wahaha and a member of the CPPCC, one dealt with the pressing question of housing.

Zong said the government should take the lead in ensuring a more diverse range of housing is available to the people. In addition, Zhou called for a government-subsidized system of low-rent and affordable housing for low- and middle-income earners, alongside fully market-oriented housing for the wealthy.

Meanwhile, the land bidding system should also be changed. The winner should be the property developer offering the best comprehensive planning instead of just the highest price. Skyrocketing land prices are regarded as a major reason for the current runaway property prices.

China's existing housing system is based on the sweeping reforms of 1998, which replaced the welfare-based allocation of housing - synonymous with a centrally planned economy, with a fully commercialized housing market.

Though this reform allowed a great many Chinese people to own their own homes, growing numbers are unhappy with the soaring real estate prices that it has also brought about.

According to the National Bureau of Statistics, property prices in China's 70 major cities grew 10.7 percent in February, the highest pace for 23 months.

For people on average incomes in Beijing and Shanghai, a regular two-bedroom apartment may cost them 20 to 30 years' income, far higher than the international average of six years.

CPPCC member Chi Susheng, a lawyer based in Heilongjiang province, says that a fully market-based housing sector is not feasible at the moment.

In fact, excessively high property prices have not only resulted in distortions in the real estate market but also loomed large as a major problem hindering the country's sustainable development and economic security.

A new housing policy attaching greater importance to low- and middle-income families is essential, Chi said.

Such an idea is, in fact, nothing new. As early as 1998, when the country embarked on housing reform, the State Council issued a notice requiring governments at all levels to set up a housing supply system to meet demand from people on lower incomes.

But the real challenge is how to ensure the comprehensive implementation of such policies.

A report submitted by the NPC Standing Committee said that by the end of August last year, only 23.6 percent of the central government's budget for economically affordable housing and low-rent homes last year had been spent.

"There have been some problems during the process, such as too narrow coverage, the lack of a supervisory body and transparency in confirming buyers' qualifications," said Gao Tianle, chairman of technology company Tengen Group and a CPPCC member.

Gao suggested that in order to ensure the policy is fully implemented, the construction of affordable housing and low-rent housing must be considered when evaluating the performance of local officials.

But for CPPCC member Li Mingyi, this is not enough. There must be a legal framework in place to ensure affordable and low-rent housing is built.

"As such a reform will definitely hurt the vested interests of some groups, a new legal framework is necessary," Li said.