Curb rising house prices

For many young Chinese, the dream of owning an apartment has become ever more distant as the country's house prices continued to rise in June.

The relentless rise of house prices - 69 out of the 70 major cities saw prices go up again in June - also brings increasing risks that they will destabilize the national economy if policymakers fail to take effective countermeasures.

The average growth in June was 0.8 percent month-on-month and 6.8 percent year-on-year. The prices of new apartments in major cities, such as Beijing and Shanghai, rose even more strongly. In Beijing, the year-on-year growth was 12.9 percent, higher than the 11.8 percent registered in May, while in Shanghai, it was 11.9 percent, up from 10.2 percent the previous month.

The average land prices for residential homes - which often indicate the trend for house prices - rose 6 percent year-on-year in 105 major cities in the second quarter, the third consecutive quarter of rising land prices.

After rapid rises in the past decade, apartments have become unaffordable to many and there are growing complaints from the public.

Meanwhile, the rising prices increase the risk of the property bubble busting, especially considering the slowing economy. If that happens, it will deal a heavy blow to the country's economic stability.

The seemingly unstoppable rise in house prices continues despite repeated vows by the central authorities to rein in prices. It calls for renewed efforts from policymakers to show that they are serious and capable of carrying out their objective of taking the heat out of the market.

Since late last year, the central government has taken measures to try to tame home prices, but the authorities are facing unprecedented pressure in managing home prices after years of unchecked growth, due to the failure to properly manage the housing market over the past years.

Not doing anything, however, will only make things worse. Policymakers cannot afford to waste more time in stabilizing prices. No matter if prices go up strongly or fall drastically it will have undesired ramifications for the economy as a whole.

If policymakers fail to take proper countermeasures, the rising house prices could accelerate in the coming months, making things spiral out of control.

(China Daily 07/23/2013 page8)