Two sides of housing coin very different

Housing prices have been soaring in most provinces even after the central government implemented new policies to check them because some local governments have taken some contradictory steps, says an article on Rednet. Excerpts:

The central government has implemented several policies in recent months to rein in the housing sector, but the results have not been satisfactory in most provinces. Worse still, some local governments have adopted measures that contradict the central government's policies.

It's true that the real estate sector has the ability to fuel (and to a large extent has driven) China's economic growth. It is also true that the greatest beneficiaries of a booming realty sector are local governments. And since local governments and real estate developers share the same interests, one cannot rely on local authorities to take steps to check rising housing prices.

Since changing the demand and supply relation is an important way of controlling soaring housing prices, the central government has asked local governments to increase the construction of apartments that the lower middle class and the poor can afford. But most of the provinces have not heeded to that directive.

Take Guangdong province. During the last "two sessions", some people's congress deputies said revenue from transfer of land use rights last year was 96 billion yuan but the government had earmarked only 600 million yuan, or 0.6 percent of the total, for the construction of affordable housing.

In terms of idea and goal, the central government regards the real estate industry as a factor of people's livelihood and hopes a majority of the ordinary people get a permanent house. In contrast, local governments consider real estate industry as an economic factor and their primary aim is to make as much money as possible from land transfers and tax revenue.

(China Daily 02/10/2010 page9)