China's local governments strive to house average people

08:45, January 29, 2010      

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Local governments nationwide are vowing to house average people whose dreams of owning a private residence are fading amid reckless property price surges.

The resolutions were made public when home prices topped the agenda at annual sessions of local legislative bodies that opened in January.

China's real estate market showed signs of overheating in the second half of 2009 despite the global financial crisis. DTZ, one of the world's leading real estate advisors, said China's average home price in 2009 was estimated at 4,518 yuan per square meter, up 30 percent from 2008.

Beijing would rein in property price hikes through persistent crackdowns on illegalities, including delaying the launch of projects and leaving construction land idle to drive up prices, said Mayor Guo Jinlong at the full session of the Beijing Municipal People's Congress.

In 2010, the government would build or purchase 134,000 welfare houses, including houses for rent and affordable houses for people with low income.

It also planned to invest 100 billion yuan (14.7 billion U.S. dollars), or almost 10 percent of Beijing's GDP in 2009, in land development to stabilize the real estate market.

Last year, Beijing saw the per capita disposable income of urban residents increase 9.7 percent to 26,738 yuan, and the average price of most new homes jump 50 percent, according to a survey conducted in mid-December by the Beijing News newspaper.

Despite lofty prices, residential properties of 18.8 million square meters were sold in Beijing in 2009, up 82.3 percent year on year, said the municipal bureau of statistics earlier this month.

"The ongoing property craze suggested potential bubbles. We have limited land resources, but I heard someone owned 100 houses in Beijing," said Qiu Ganqing, a deputy to the Beijing Municipal People's Congress.

The southern island province of Hainan also faces property bubble concerns after the central government announced a plan this month to build the island into a top international tourist destination by 2020.

The government would curb the speculative bubbles, as well as build more welfare houses for low income families, said Luo Baoming, provincial governor at the full session of the Hainan Provincial People's Congress.

In Shanghai, home price growth saw an 87.4-percent rise in 2009, DTZ said.

The Shanghai government would further curb investment-led demand in the housing market, and build 700,000 welfare houses by 2012, said Yu Zhengsheng, secretary of the Shanghai Municipal Committee of the Communist Party of China, at the annual full session of the Shanghai Municipal People's Congress.

"Shanghai faces a tight land supply. So our residential properties should mainly benefit inhabitants, not investors," Yu said.

"Driven by high property prices, the cost of home rents has also soared," said Yin Baoxing, a deputy to the Shanghai Municipal People's Congress.

China had made several moves to stop the bubble in an early stage, including reimposing a sales tax on homes sold within five years of their purchase from this year and increasing the down payment requirement for land purchases to at least 50 percent of the total price.

The measures would crack down on speculation and lead to stable house prices, said Liu Hongyu, head of the real estate research center of Tsinghua University.

But DTZ said since it takes about a year to finish construction projects, the supply of commodity residential homes should peak in 2011 when the imbalance of demand and supply is expected to be addressed.

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