Government and Policy

China to fight profiteering in property sector

(Xinhua)
Updated: 2011-04-27 21:41

BEIJING - China's top price regulator is mulling new rules to fight profiteering in the commercial property sector, a Chinese official said Wednesday.

"We are studying costs, profits and prices in the property sector and plan to implement measures to check for profiteering," said Xu Kunlin, chief of the Price Department of the National Development and Reform Commission (NDRC), the country's top economic planner and price regulator.

The move is in line with China's existing anti-profiteering regulations.

"Profiteering in China's property market is high," said Mei Xinyu, a researcher with the Chinese Academy of International Trade and Economic Cooperation, a government think tank under the Ministry of Commerce.

While affirming the need to cool China's overheated property market by cracking down on profiteering, Mei said the government faces challenges in actually taking action. China's anti-profiteering regulations, created in 1995 by the State Council, have been criticized for being incomplete and lacking detail.

"It will take great effort to overcome resistance from vested interests, who are used to huge profits in the sector, in implementing these new regulations," Mei said.

The NDRC already created regulations for the purpose of keeping housing prices down in March, in order to address public complaints about the lack of transparency in home pricing.

The regulations - Regulations Regarding Marketing of Commercial Housing at Marked Prices - will take effect on May 1.

A local official from Haikou, capital of Hainan Province, has  dispelled misleading rumors about the city canceling its "purchase limit" -  a policy used by the State Council to cool the property market.

Dai Kaiquan, chief of the market management section of Haikou City's Housing and Urban-Rural Construction Bureau, told Xinhua on Tuesday that Haikou would continue to use governmental property control policies and that there is no plan to suspend the purchase limit policy.

The State Council has adopted a series of measures since last year to tame housing prices, including higher down payment requirements, raising  interest rates, direct restrictions on home purchases, the establishment of price control targets, third-home purchase bans and a trial real estate tax in Shanghai and Chongqing, two of China's biggest cities.

The government's measures appear to be working, as some cities reported decreased property trade volumes and month-on-month declines in property prices, but overall prices have not dropped significantly, said Yang Hongxu, an analyst with the Shanghai-based E-house China Research and Development Institute.

Property control policies are at a critical period and more efforts should be made to tighten these policies, Yang said.

The State Council recently ended a nationwide supervision campaign concerning local governments' housing price control efforts.

Some cities reported lower or flattened housing prices in March, but most cities saw housing prices increase, according to the National Bureau of Statistics.

Chen Guoqiang, director of the real estate research institute of Peking University, said it will take time for the market to digest these new policies.

The magnitude of the effects of the policies depend heavily on interactions between real estate companies, local governments and the central government, Chen said.

The key now is not to map out new policies, but to tighten current ones, Chen said.