A check of Saturday morning's Internet BBS columns turned up a large cluster of opinions about the housing market. That's not surprising given that the most important development for the Chinese economy last week was surely the State Council decision, adopted on May 17, to slow down urban house pricing. It is called the State's "six points," a follow-up of the "eight points" that the Chinese cabinet adopted about a year ago. Both decisions were designed to provide guidelines for the so far unruly property market. The first comment I saw on sina.com was: "Whoever allows us to afford our homes, our medical care, our education and our children's jobs, we'll elect to be the king." This was followed by: "I agree, except for our children's jobs these are for them to grab for themselves." Despite the playful wording, these comments contain deep logic. They show where the demarcation is in people's hearts, between the market economy and government responsibility. And housing is one of the things that many citizens aren't ready to give up completely to the market. The central government's "six points" of last week was a response to this sentiment, based on the fact that in the housing markets of some big cities, prices have continued to skyrocket, despite its "eight points" policy of last year. According to Chinese-language press sources from January to April, of the 70 large cities, 11 showed an average price increase of more than 7 per cent year-on-year, and three, including Beijing, showed an increase of more than 10 per cent. In 16 cities, housing units on offer are larger than 120 square metres in average floor space, not the kind preferred by medium-income earners the office and factory-workers and small merchants. All the unsold units are larger than 150 square metres on average. At the same time, unlawful and deceitful practices on the part of developers and sales agents are still widespread. This is evidence enough that, at least in these cities, developers on the whole have failed to win much public support since the introduction of the eight points. Is it possible for developers to manage themselves in a way that doesn't set them apart from the rest of society? Can they ever earn trust for their industry? Government advisers are standing right by calling for differentiated mortgage policies and interest rates when more low-price units are built. The bigger buyers may be asked to pay higher taxes, bigger down payments and higher interest. It is time for China to find more effective ways to regulate the housing market. There should not be just a system of temporary points, but an overall programme at least for large cities near the coast, especially the development of their residential housing. For instance, it would not be far-fetched for cities like Beijing to have some satellite towns in its previously impoverished nearby rural areas, strictly reserved for wealthy out-of-town buyers. If they want to be closer to the city and to its international facilities, let them have the roads if they want to pay for them. But they should not be allowed to compete for inner-city housing. Press figures show that in 2005, property investment in five places Jiangsu, Guangdong, Zhejiang, Shanghai and Beijing accounted for more than half of that across the Chinese mainland. Buyers from out of town made up 39 per cent of all property buyers in Beijing, and 23 per cent in Shenzhen, a city in Guangdong. This is enough of an indicator of where the money has been flowing, and along with it the nation's private and corporate house buyers and the entire nouveau-riche class. Where to buy a house and to set up one's business is, of course, a private decision. But judging from the limited land supplies in existing large cities, and the social consequences of many urban medium-income earners being unable to afford their own housing, this should not be an area entirely left to the mercy of market forces. In the inner city, especially where the convenience of a public transport system exists or is planned, permission is only issued for small housing units designed for its office and factory workers. In the crowded financial district, the municipal government may even own some buildings (but not provide their management) so as to collect rental money for meeting the constant demand for ultra-modern roadworks and traffic management. Email: younuo@chinadaily.com.cn (China Daily 05/22/2006 page4)
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