Yesterday was the renewed deadline set by the
Ministry of Construction for local officials to finish construction plans in
which homes smaller than 90 square metres must account for at least 70 per cent
of the total floor space of new property projects.
In the face of rising public complaints about rocketing house prices, the
construction authorities ostensibly set the limit on the size of houses as a
stopgap measure to rein in rising house prices.
Unfortunately, there was no news available on how local governments had
progressed with this task yesterday. The Ministry of Construction was only
reported to have issued a notice asking local governments to complete an annual
report on local housing statistics accurately and on time. And the ratio of
homes smaller than 90 square metres among new housing projects was supposed to
be included in those new statistics to be reported by the end of next January.
It would be sad if that meant the deadline had to be reset again.
The harsh tone taken by the ministry with local governments late last month
still echoes. At that time, the construction authority found that by the end of
September, more than 65 per cent of prefecture-level cities and 91.1 per cent of
county-level cities in 10 provincial regions surveyed had not yet published
their housing construction plans.
That meant most local governments had not taken seriously the central
authorities' efforts to curb the excessive growth of property prices. And their
reluctance to take action was much related to the unstoppable rise of house
The limit on the size of a house unit appeared to be a strange prescription
for cooling an overheated real estate sector.
Rather than targeting the total price or the per-square-metre price of new
houses, the authorities focused on urging property developers to build smaller
houses in the belief that paying less for a smaller home is a better deal for
For those who are looking for a small and cheap house, that may sound like
good news if the price per square metre does not continue to rise. But the fact
that the average size of finished houses for sale stood at 144 square metres in
Beijing and above 110 square metres in 40 major Chinese cities this year
indicated either the property developers are ignorant of consumer preferences or
there is a considerable market demand for large homes in these cities.
However, in spite of such concerns over individual consumer preference, the
government effort to urge development of smaller houses is still needed to
squeeze the property bubble. Because, at the very least, it will increase the
number of new houses at the given level of land supply to meet the housing
demand of more consumers. And such an increase in supply may help prevent
further housing price hikes.
If policy-makers are resolved to go against the pricing expectation of
homebuyers, they should stick to the adopted measures until they have taken
(For more biz stories, please visit Industry Updates)