End real estate as major player in development
By Qi Jingmei (China Daily)Updated: 2007-03-22 16:04
The author is a senior economist with the State Information Center
During the just-ended session of the National People's Congress, Premier Wen Jiabao raised several targets for the government to hit in controlling the overheated property sector.
His latest remarks emphasized raising the supply of property, stabilizing property prices and developing reasonably priced commercial housing for ordinary people.
The stress on increasing the property supply as the fix for property prices is a remarkable policy shift.
The State has obviously realized that the single-handed measure of curbing property prices does not work well. Instead, a rise in supply will probably ease the momentum of rocketing property prices.
Such a shift will prevail in the macro control over housing estates for quite some time. The shift acknowledges that the country has a strong demand for housing.
Boosting the property supply is a good resolution to the problems troubling the estate market. Yet, the land for housing development has become increasingly scarce, especially in big cities.
A practical solution to significantly boost the housing supply is to stimulate the sale of previously owned houses. Arrangements should be made to facilitate such transactions by lowering commissions, taxes and related fees.
Another important approach for raising the housing supply is to break up the
monopoly in the real estate markets by encouraging developers
of various business types.
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