'Resigned' to higher housing prices

By Li Fangchao (China Daily)
Updated: 2007-01-23 07:18

The ever-rising price of property in China has become cause of worry for an increasing number of people, shows a survey.

Despite the measures taken last year to cool down the overheated real estate market, fewer people now believe that the prices would stabilize in the near future.

Only one-fifth of the 2,582 people polled by China Youth Daily's social research centre, sina.com and ePanel Marketing Research & Consulting Co were confident that the government's steps would check the trend. Their percentage was nearly 60 in a similar survey conducted only two years ago.

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The poll results announced yesterday showed another significant change: instead of blaming real estate investors for raising the prices to earn huge profits, as respondents had done two years ago, more people now blame the government's vulnerability in macro-control measures for the malaise. They said local governments lack the tools to carry out the measures.

The rising demand and the concurrent raising of prices by investors are to blame, said Bao Zonghua, president of China Real Estate And Housing Research Association. "And the macro-control measures need time to take effect."

Almost all the respondents said there was a "bubble" in the real estate market, with nearly half being certain that it would burst in 10 years. But almost 40 percent believe that the "bubble" would never burst.

A whopping 80 percent believe that real estate prices would continue to rise this year, and 30 percent fear it would do so at a greater pace.

In contrast, only 13 percent think prices would fall.

Property prices in 70 large cities last month rose at an average rate of 5.4 percent year on year, a National Development and Reform Commission report showed. Prices in Beijing, in fact, jumped 10.4 percent year on year, the second fastest growth among the 70 cities.

Public desire

The skyrocketing realty prices have obviously dampened people's desire to buy a house in the near future. Nearly 40 percent respondents said they could not afford to buy one, and another 54 percent said they could only do so if they opted for those subsidized by the government or if they chose to live in the suburbs.

Nearly half said a definite "no" to buying a house this year, and only 20 percent would as much as consider buying one.

To check property prices from rising rapidly, the country implemented a series of macro-control measures in the last two years.

Last May, the central government banned the use of new land for luxury villas and reiterated that more land be made available for smaller, affordable housing.

In June, a statement issued by nine ministerial-level departments ordered that houses within 90 square meters should account for at least 70 percent of the planned real estate constructions, and raised the down payment to 30 percent.

The latest move came on January 16, when the tax authorities announced they would levy a land appreciation tax from next month on real estate companies.

(China Daily 01/23/2007 page3)

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