Top Biz News

Senior officials condemn the housing bubble

By Cui Xiaohuo and Yang Wanli (China Daily)
Updated: 2010-03-08 13:58

Beijing's exorbitant housing prices have come under attack among deputies to the ongoing national legislative meeting, as senior officials opened fire on the bubble in the property market.

Senior officials condemn the housing bubble

Du Deyin is a senior Beijing official who spoke out against the housing bubble.

Du Deyin, a senior Beijing official and head of the Beijing's local legislative body, made a bold speech on Saturday questioning the local authorities' futile effort to control property prices. He implied Beijing's land resources and construction authorities are not doing their job.

"The cost for building an apartment is 3,000 yuan ($439.46) per sq m, but the average market price is 17,000 yuan. The difference is the soaring land prices," Du said, aiming his point at construction and economy planning officials also present at group discussions on the central government's annual work report.

"Instead of encouraging real estate dealers to snap up lucrative land deals, authorities should control land prices and offer special funds to house buyers."

Officials under fire smiled tensely at Du's remarks and responded that they would address the problem along with other departments in the city.

Market observers said Beijing's housing prices have for years been manipulated by the collaboration of real estate dealers and some local officials. Authorities award lucrative land deals to developers while the latter pay a large amount of tax to the government.

The central government's work report, addressed by the nation's cabinet on Friday, said authorities must curb excessive growth of home prices in major cities and satisfy the public's basic need for housing.

Driven by record bank lending and favorable tax breaks, major cities nationwide have seen a sharp residential property price hike nationwide over the past year, triggering heated public complaints and fears of possible bubbles in assets.

In Beijing, the average housing prices in hotly pursued residential areas shot up from just over 15,000 yuan per sq to 20,000 yuan per sq m in 2009. Preliminary reports said the capital's property market saw a total increase of 23.5 percent last year - the major reason seemed to be government's failure to provide enough land resources for low-cost housing.

While white-collar workers are upset to find housing prices grow faster than their incomes, low-income house buyers have criticized the government's "harsh criteria" for low-cost housing.

"I don't think anybody will fit the criteria," said Zhang Yue, 39, an electric engineer and the bread winner for a family of three. "Authorities should relax the criteria for more families like us to have our first apartment in Beijing."

Beijing's current policies on low-cost housing require a family of three to earn no more than 3,775 yuan per month in order to qualify.

Zhang and his wife, who works two shifts a day, make 4,500 yuan per month, but their real incomes are just over 3,500 after tax. However, the government said the family is not eligible for low-cost housing.

The Beijing government rolled out new rules last month to control housing prices, with plans to allocate over 50 percent of new land for the construction of low-cost apartments for the mass middle-income earners this year. More than 134,000 subsidized apartments will be built to meet the needs from the low-income residents.

Zhang Gong, director of the municipal commission of reform and development, also told reporters yesterday, authorities would subsidize low-income earners on their housing this year.

But he declined to predict whether the housing price would continue to surge this year.

"I cannot tell you right now what the future housing prices will be in Beijing, as the city continues to expand," he said. "But we certainly don't want the problem to jeopardize Beijing's residents' request for basic housing."