How to effectively curb soaring house prices?
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China's housing prices are still soaring, despite the central government taking various measures to cool the overheated property market. Why?
The Ministry of Housing and Urban-Rural Development (MOHURD) is directly in charge of the property market. However, Vice Minister Guo Yunchong says the department does not actually have the power to control rising home prices. The reason, Guo says, is factors that affect housing prices, such as land, taxes and financing, are regulated by other governmental departments.
However, Guo did say that MOHURD will cooperate with other departments this year to issue practical measures and better regulate property prices.
At the CPPCC plenary session on March 7, Liang Jiyang gave another reason for the excessive growth in home prices. "The root cause is the local government's over-reliance on land. In several cities, the amount real estate developers must pay the government for land use accounts for 50 percent of the local financial revenue."
Chen Wanzhi, vice chairman of the Chongqing Municipal Committee of CPPCC, mentioned another cause for the high prices. "There are 12 tax categories and 50 different kinds of charges involved in the real estate industry, which to some extent pushes-up property prices."
In order to curb housing prices, the key will be to balance the interests among the government, real estate developers and consumers. We should establish a mechanism that can restrain the first two sides' impulse to pursue interests, thus protecting the people's interests and allowing them to buy a house, quickly and easily.
(This post was first published in Chinese on March 9, 2010 and translated by Ma Yujia.)
