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Home » Opinion » Chinese Views
Local chiefs eye fancy projects, not low-rent homes
Source: Xinhua |
January 18, 2011, Tuesday
|
Print Edition
Print Edition
CHINA is pinning hopes on its affordable housing programs to cool its red-hot property market in the latest round of measures against rising asset bubbles.
Experts say that increasing the supply of affordable housing is the key in guiding the market toward healthy development.
But much depends on how well local governments - which depend heavily on land sales for revenue - implement plans to build low-cost and affordable housing.
The problem is that local governments derive far more income from big commercial and high-end residential developments and may be reluctant to settle for less since many lack diverse income sources. They would not only earn less for land but also have to dip into local coffers to help finance the projects.
Price control
During a talk show hosted by China National Radio on December 26, Chinese Premier Wen Jiabao said the government will press forward with housing price controls and increase the supply of affordable houses for low-income earners.
He spoke after the government had announced a plan to build 10 million more low-income housing units this year.
China is working on a healthier system that provides housing that meets different demands, after an array of policies, including tighter credit for commercial housing, failed to produce satisfactory results in 2010. In 70 major Chinese cities, home prices rose 0.3 percent month on month and 7.7 percent year on year in November last year, which was the third consecutive month prices rose.
'Sandwich class'
China started the construction of some 5.9 million units of affordable homes in 2010, of which 3.7 million were completed, official figures showed.
Qin Hong, a researcher with the Ministry of Housing and Urban-rural Development, said the number of affordable homes is still "far from enough," especially as more low-rent homes are needed for China's "sandwich class" families who either do not quality for low-cost housing or cannot afford the sky-high prices of commercial housing.
The latest report from the State Information Center (SIC) noted that the construction of the 3 million affordable homes and 2.8 million units renovated in urban shantytowns is shaping the property market in a more reasonable manner.
"Only a dual structure that balances the development of both low-cost housing and commercial housing can ensure a stable and healthy market," the report stated.
However, both policy makers and market observers have pointed out that the good intentions of the central government's regulations and construction plans could fade if local governments fail to implement them properly.
Local governments could be reluctant to implement them, as they are asked to both transfer the land at a low price and help finance these projects, which will definitely reduce their fiscal revenues, he explained.
Although the past year witnessed "the strictest curbs on the property market," land transactions generated 2.7 trillion yuan (US$409 billion) in revenue to local governments last year, a 70.4 percent surge year on year.
In contrast, the Chinese central government provided 55.06 billion yuan to finance affordable housing construction in 2009, while local governments spent only 17.54 billion.
Social conflicts
Xu Shaoshi, minister of land and resources, said earlier this month that the rapid increase in land transaction fees suggested that China's urban development is becoming more dependent on land sales, which has triggered an uneven distribution of interests and social conflicts.
Experts suggested that the central government weigh how well local governments implemented affordable housing plans in evaluating their performance, and the improve legal system to enhance enforcement of low- and affordable-housing projects.
In response to the central government, local governments have begun to unveil plans on low-cost housing this year. In the country's economic hub of Shanghai, where home prices rose 37.24 percent year on year last November, the government announced plans to build 15 million square meters of affordable homes.
The city government also promised that of all new homes to be built this year, 5 percent must be affordable.
Experts say that increasing the supply of affordable housing is the key in guiding the market toward healthy development.
But much depends on how well local governments - which depend heavily on land sales for revenue - implement plans to build low-cost and affordable housing.
The problem is that local governments derive far more income from big commercial and high-end residential developments and may be reluctant to settle for less since many lack diverse income sources. They would not only earn less for land but also have to dip into local coffers to help finance the projects.
Price control
During a talk show hosted by China National Radio on December 26, Chinese Premier Wen Jiabao said the government will press forward with housing price controls and increase the supply of affordable houses for low-income earners.
He spoke after the government had announced a plan to build 10 million more low-income housing units this year.
China is working on a healthier system that provides housing that meets different demands, after an array of policies, including tighter credit for commercial housing, failed to produce satisfactory results in 2010. In 70 major Chinese cities, home prices rose 0.3 percent month on month and 7.7 percent year on year in November last year, which was the third consecutive month prices rose.
'Sandwich class'
China started the construction of some 5.9 million units of affordable homes in 2010, of which 3.7 million were completed, official figures showed.
Qin Hong, a researcher with the Ministry of Housing and Urban-rural Development, said the number of affordable homes is still "far from enough," especially as more low-rent homes are needed for China's "sandwich class" families who either do not quality for low-cost housing or cannot afford the sky-high prices of commercial housing.
The latest report from the State Information Center (SIC) noted that the construction of the 3 million affordable homes and 2.8 million units renovated in urban shantytowns is shaping the property market in a more reasonable manner.
"Only a dual structure that balances the development of both low-cost housing and commercial housing can ensure a stable and healthy market," the report stated.
However, both policy makers and market observers have pointed out that the good intentions of the central government's regulations and construction plans could fade if local governments fail to implement them properly.
Local governments could be reluctant to implement them, as they are asked to both transfer the land at a low price and help finance these projects, which will definitely reduce their fiscal revenues, he explained.
Although the past year witnessed "the strictest curbs on the property market," land transactions generated 2.7 trillion yuan (US$409 billion) in revenue to local governments last year, a 70.4 percent surge year on year.
In contrast, the Chinese central government provided 55.06 billion yuan to finance affordable housing construction in 2009, while local governments spent only 17.54 billion.
Social conflicts
Xu Shaoshi, minister of land and resources, said earlier this month that the rapid increase in land transaction fees suggested that China's urban development is becoming more dependent on land sales, which has triggered an uneven distribution of interests and social conflicts.
Experts suggested that the central government weigh how well local governments implemented affordable housing plans in evaluating their performance, and the improve legal system to enhance enforcement of low- and affordable-housing projects.
In response to the central government, local governments have begun to unveil plans on low-cost housing this year. In the country's economic hub of Shanghai, where home prices rose 37.24 percent year on year last November, the government announced plans to build 15 million square meters of affordable homes.
The city government also promised that of all new homes to be built this year, 5 percent must be affordable.
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