Long-term steps needed for property management

Potential homebuyers examine a property project model in Nanjing, East China's Jiangsu province, Feb 28, 2016.[Photo/VCG]

China's property prices are not expected to come down in the next 15 years given the current demand-supply gap and the urbanization drive. The central government should focus on infrastructure building to avoid steep up–and-downs on property prices, which could lead to social insecurity, said Jia Kang, principal economist of the China Academy of New Supply-side Economics, and the former president of Institute of Fiscal Science, Ministry of Finance, as reported by the FT Chinese at the Boao Asia Forum. Here are some of the keynote points of the economist.

First, the governments of all levels should provide sustainable land supply, giving room to land development under the national land development regulations with flexibility. Chongqing model should be expanded. Under the experiment of dipiao (literally translated as 'land ticket' ) land certificate, a warrant-like certificate linking rural and urban land, Chongqing’s developers can buy the ‘right’ to develop farmland beyond the annual quota, to increase urban expansion.

Second, China should promote different classifications of housing, providing public-renting houses and public-owned housing for low-income class. Different housing system is the trend for the foreseeable future, and should come along with the affordable housing to form a reasonable market rule under proper coordination.

Third, the government could attract private capital into the real estate industry under the style of the public-private-partnership frame, providing funds and infrastructure for housing. In this way a more balanced supply-demand property market could take shape.

Fourth, real property tax and inheritance tax should be introduced, just like US, Japan, and some European countries to halt speculation in the housing industry.

Facing unsatisfactory conditions and inherent flaws, the above four long-term measure should be undertaken right now. Any short-term regulations like loan and purchase prohibitions would only be temporary.

FT Chinese