China's first batch of housing with limits placed on the selling
price and on floor space of each apartment went on sale last
week.
Poly Real Estate Group Co. Ltd., which built 843 apartments each
selling at 6,500 yuan per sq meters, at Jinshazhou of Baiyun
District, Guangzhou City, sold about 700 flats on Feb.16, the first
day of sale.
Only households certified by the Guangzhou Land and Property
Administrative Bureau can buy homes from Poly's price-limit housing
development project.
Housing prices continued to soar in China's major cities in the
fourth quarter last year and are likely to rise this year too.
The average housing price in China's 70 large- and medium-sized
cities climbed 10.2 percent in the fourth quarter of 2007 from the
same period of 2006, according to the National Development and
Reform Commission.
Houses have been getting more expensive despite government
efforts to curb real estate investment and shelter low-income
families.
The efforts have been characterized by increased supplies of
low-rent, affordable housing, and price-limit housing which aims to
expand the supply, and help stabilize prices.
The Chinese Minister of Construction Wang Guangtao backed the scheme, saying
price-limit housing would be a principal means of helping families
with median income in large and medium-size cities solve housing
difficulties.
Guangzhou is not the only Chinese city that has been attempting
to address the problems of rising costs of property and to provide
all urban dwellers with housing through price-limit housing.
Beijing started construction of 3.12 million sq m price-limit
housing last year. Building of an extra 4.5 million sq m housing of
the same kind will start this year, according to Li Sanzhong, an
official with the Municipal Development and Reform Commission.
Beijing Municipal Construction Committee has asked for public
opinion on price-limited housing on its website. Only urban
families whose annual income is below 88,000 yuan (about 12,054
U.S. dollars) can buy the price-limit housing. More Chinese cities
are expected to follow suit.
But will the solution of price-limit housing really work as
decision makers expect it? At the moment, the cons have
overshadowed the pros.
Fu Weichong, chairman of the board with Hopefluent Group
Holdings Limited, a real estate counselling business, vehemently
opposed the practice.
"It is a bad idea to implement the price-limit housing policy or
carry out the practice of building apartments with subsidies from
working units," said Fu, who is also a member on Guangzhou city
committee of the Chinese People's Political Consultative Conference
(CPPCC), a government work advisory body, during
a group discussion on economic affairs held in Guangzhou.
"Price-limit housing should be abolished as it will bring along
new inequality and will do harm to the harmony of society," said
Fu.
Fu was confronted by Ou Muhua in an online posting with www.people.com.cn, saying that
one benefit of price-limit housing is to help squeeze bubbles in
price adjustments.
The government-supported price-limit housing lacks a theoretical
basis, and would be considered as "gilding the lily", said Xu
Dianqing, an economist, during an interview with China Real
Estate Business, a Beijing-based newspaper.
"Housing prices are complicated, and are decided by diverse
factors of real estate projects such as location, environment,
structure and quality," said Xu.
"The intention on the part of the government is to transfer part
of the profits of the developers to home buyers by way of setting a
ceiling on the selling price of certain housing, but that intention
is hard to meet in reality and in the end the quality of the
housing suffers."
The effect of the price-limit housing is restricted, said
another posting on
(Xinhua News Agency February 21, 2008)
