Domestic Affairs

New move on housing may set an example

By Huang Shuo (chinadaily.com.cn)
Updated: 2011-02-28 15:30

The central government of China has sped up efforts to slow down rising housing prices, which have been a major source of public complaints in the country's biggest cities and even rural areas.

However, housing prices have remained stubbornly high. Home prices in 70 major cities of China rose 0.3 percent month-on-month in December last year, and 6.4 percent year-on-year, after an array of measures failed to restrain the surging prices, according to data disclosed by the National Bureau of Statistics on Jan 17, 2011.

A new series of regulations on realty, publicly recognized as the “strictest” in history, were approved by Beijing officials on Feb 16, which is expected to shock the real estate industry in Beijing. The regulations restrict home buying for local resident families, and also for migrant- families without registered permanent residence at the local public security bureau.

Fifteen articles of the new rule stipulate that local families with two or more houses are not allowed to purchase new ones. Non-local families with household registration outside Beijing having cannot buy more than one home. As to outsiders working and living in the capital, they are required to buy a house only after paying taxes and owning a social security certificate for at least five-consecutive years.

Beijing’s housing market is probably on the road to experience another round of ups and downs. Investment-oriented and speculative property purchases have been targeted as the major threats to sustainable real estate development. But there is determination from policymakers who were astonished by the severity of increasingly high housing prices in recent years. Hence, they are adopting more severe measures.

Outsiders from other places in China have relatively dominated the real estate sector in the capital, which has experienced an upward trend in home prices as a result. Amid these outside investors, mushroom millionaires and social elites constitute the majority of buyers. In the home trading market, local buyers only accounted for 35.5 percent. Non-locals are the majority of home owners and half have less than five years of working time in Beijing, according to statistics from Beijing 5i5j Real Estate Agent Co, Ltd (5i5j), one of the major real estate agents in the market.

One industry insider stated that it can be estimated that purchasing power is likely to be reduced by about 30 percent in response to the new real estate policies.

In a recent survey carried out by finance.qq.com, 64 percent of 300,000 netizens interviewed believed that policies on sales restriction are unfair to outsiders; and 48 percent said the new rules would affect their own property-buying plans. Of those polled, 40 percent said the rules will have no effect on their purchasing plans, and 58 percent said they did not believe the new rules would lower home prices in Beijing.

What outcomes will the people in Beijing attain if the measures can be implemented adequately and sufficiently? Soaring home prices are bound to be curbed to some extent, especially if enough affordable housing is built for ordinary people.

I think that serious limits on housing are temporary. Local officials just want to initially lower buying power, but leave room for sustainable development. In fact, shortages of cheap rental homes and welfare housing for disadvantaged groups directly result in high prices in the sector.

Whether the policies in Beijing this time are successful or not is a barometer for other cities in China. If they fail, they can offer a vivid lesson for the government to produce a better plan to regulate housing prices. If they are successful, the new measures in the capital will set a good example for other cities around the country.

The author can be reached at larryhuangshuo@gmail.com.