Let developers decide

The government's direct involvement in pricing commercial houses goes against market rules and affects healthy development of the real estate sector, says a China Youth Daily story. The following is an excerpt:

The Jiangsu provincial administrative departments will suspend examinations of commercial house pricing and let real estate developers decide prices independently starting this year.

But the government also announced the suspension is temporary. The administrative procedure will be resumed once the economic situation changes.

The government should have a voice in pricing government-subsided houses or low-rent houses, which target low-income group and enjoy preferential policies. But commercial house prices should be decided by supply and demand.

Ordinary people are almost unable to afford commercial houses. But imbalance between sellers and buyers is causing the rising prices, not a lack of governmental interference.

Government interference on commercial house pricing adds to developers' costs, which will ultimately be passed on to homebuyers. It may also facilitate corruption and degradation.

Developers have more information than the government on the cost of houses. Without an accurate calculation of the cost the government cannot price the houses reasonably.

The decision by the local government to suspend price checking is smart; it deepens reform and pushes the market economy forward.

(China Daily 01/19/2009 page2)