Government and Policy

Hoarding of land tackled in new rules on property

By Hu Yuanyuan (China Daily)
Updated: 2010-09-28 07:32

Measures aim to increase housing supply and counter rising prices

BEIJING - Regulations to combat land hoarding by developers and boost the construction of government-subsidized housing were unveiled on Monday in the latest government efforts to curb property prices.

The regulations were announced amid climbing real estate transactions and public concern over high prices.

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Developers will be banned from bidding for more land if they have land idle for more than one year, illegally transferred land, or developed land in breach of agreements, according to a statement jointly released by the Ministry of Land and Resources and the Ministry of Housing and Urban-Rural Development.

"Further tightening of land controls is an important task in continuing to contain rising property prices and promoting a reasonable correction in housing and land prices," said the statement.

Under the regulations, the government will also increase land availability for smaller, affordable apartments in cities with high real-estate prices, and no parcels should be used to build large, expensive properties before the supply of government-supported housing is on the market.

"All these measures are aimed at increasing the housing supply to ease pressure for further price growth, especially when the existing housing stock is falling due to climbing transactions recently," said Qin Xiaomei, chief researcher with property consultancy Jones Lang LaSalle Beijing.

Ren Zhiqiang, chairman of Beijing-based Huayuan Real Estate Co Ltd, said at a forum held by house.china.com that property prices will gradually stabilize or dip next year as the imbalance between supply and demand improves.

Moreover, industry sources also said that a special team, consisting of officials from the housing ministry and the banking regulator, are investigating the implementation of mortgage policies for second-home purchases in eight cities, including Beijing and Shanghai.

Growing property sales and the public's expectation of rising value are believed to be the main reasons for this new round of policy tightening.

According to Beijing Real Estate Transaction website, the sales of future delivery housing and completed homes during the Mid-Autumn Festival (Sept 22-24) were 638 units.

This represented an increase of 273.1 percent for future delivery housing and a 236.2-percent rise for completed homes as compared with the amounts sold during the Dragon Boat Festival in May, one month after the government launched a series of measures to curb property speculation.

Some popular projects increased their sale price by 5 percent, as demand largely exceeds supply.

Jia Zhengru, marketing manager of Leju, the real estate channel of Sina.com, said 10,980 people joined their house-hunting group in Shanghai on Sept 23, with deals worth close to 600 million yuan ($88.7 million) reached.

"Most buyers seek property for investment, self-use or retirement purposes," said Jia. "Despite recent fluctuations, most buyers believe that property prices will go up in the long run and real estate is still an ideal investment."

An increasing number of Chinese, in fact, think property prices will rise further, according to a quarterly survey by the People's Bank of China. Out of 20,000 consumers surveyed, 36.6 percent said price growth would accelerate, up from 29.4 percent in a previous survey in June.

Meanwhile, an overwhelming majority of respondents said in a survey that they were finding it difficult to purchase a property in a high-priced market. More than 90 percent said that they were at least "unsatisfied" with their region's real-estate values, the People's Daily reported on Monday.

The survey of more than 46,000 participants on the newspaper's website, people.com.cn, found 73 percent were "deeply unsatisfied" with housing prices and 18 percent were "unsatisfied".

According to the National Bureau of Statistics, property prices in China's 70 major cities grew by 9.3 percent in August, down from the 10.3 percent growth seen in July, the slowest pace so far this year.

However, month-on-month figures for property prices remained unchanged for two months after witnessing a 0.1 percent decline in June, the first decrease in 16 months.

Gao Ting, managing director of UBS Securities Co Ltd, said such a situation could hardly be expected to continue.

"The market will soon choose a clear direction, either a further increase or a drop on a monthly basis. So, stabilizing people's expectations is quite important to maintain a stable price," said Gao.