Shanghai's future depends on housing price issue: mayor

08:37, January 24, 2011      

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Shanghai will have no future if it cannot handle the housing issue properly, Mayor Han Zheng said last week.

"The young generation is severely pinched by sky-high prices in the city," he said at a press conference at the end of the annual session of the Shanghai People's Congress, the city's legeslature.

"The city will not have a future if it loses the hearts of a generation," the mayor said.

Migrant laborers, who constitute about a third of the city's registered population, provide many vital services and have built most of its showcase skyscrapers, are among those worst affected. Many young, middle-class workers also chafe at the soaring housing costs.

Housing prices in the city rose to a record average of 24,176 yuan (US$3,652) per square meter in December, up 7.6 percent from November and up 21 percent from January 2010.

The Shanghai office of the central bank has forecast that it expects housing prices to drop slightly in 2011, though the amount of transactions will remain at the same level as in 2010.

Han also said that Shanghai would increase the minimum wage by at least 10 percent from April 1 to let residents share in the city's growth.

It was also the right time to introduce the long-expected international board at the Shanghai Stock Exchange, he said.

On housing, Han said that the city was planning a property tax, a more accessible budget home system and more low-rental homes to cool the runaway real estate industry.

"Shanghai is positively preparing for the launch of property tax trial under the central government's guidance," Han told the press conference.

On Tuesday, Han told local lawmakers that Shanghai would levy a property tax on spacious, newly purchased homes but gave no further details.

At the press conference yesterday, he didn't answer inquiries about the details of the property tax trial.

Earlier media reports said Shanghai and Chongqing had submitted their proposals to the State Council and were expected to impose the property tax in the first quarter of this year.

Some market insiders speculated that Shanghai would tax families who have a floor area of more than 200 square meters, or 70 square meters per person, at a tax rate around 0.5 to 0.6 percent.

Shanghai plans to set a higher threshhold on income or assets of applicants for budget homes by at least 10 percent to let more residents join the program, Han told the press conference.

At present, local individuals whose monthly salary is less than 2,900 yuan or those who have average household assets of less than 90,000 yuan can buy budget homes in Shanghai.

Han reiterated the city's determination to end housing speculation.

Shanghai will stick to existing tightening measures on housing sector, including restricting families to buying just one new home, freezing mortgages on third-home purchases and raising required down payments and interest rates charged for second homes.

On the minimum wage, Han said that Shanghai had yet to finalize its plans, but he promised an increase of at least 10 percent.

The minimum wage is currently set at 1,120 yuan.

On the environment, he said the city would roll out more measures to keep a green and clean city.

"We were blessed that the air conditions were quite good during the World Expo with blue sky," he said. "We have maintained our efforts to keep it after the Expo but it's just that the sky didn't keep the good face," he joked.

During the Expo, hay burning was not only suspended in suburban Shanghai but in the whole of the Yangtze River Delta, the mayor said.
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