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Housing a hot topic of debate at 'two sessions'

By Yi Xianrong (China Daily)
Updated: 2009-03-06 07:42

Housing was a heated topic at this year's sessions of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC), convened this week.

Proposals submitted by NPC deputies and CPPCC members mainly involve such contentions as whether the country should revoke the long-prevailing housing pre-sales system, impose taxes on house vacancies and extend tenants' local hukou, or permanent residence.

It is expected similar motions are to be raised as the agendas of the two sessions press ahead.

Closely related to the vital interests of all individuals and households, housing has always been an outstanding issue as well as a focal point of the country's economic, political and social affairs.

It is normal then that different interest groups have presented conflicting proposals on the long-controversial issue.

However, we should bear in mind the core problems of the country's real estate market. The importance of the real estate sector to the national economy is indisputable.

This was clear in government No 131 document for the real estate, which confirms it as a "pillar industry".

But the document also states that the sector's status is based on it offering ever-improving housing to every Chinese citizen.

The housing market would lose this legal foundation as the country's pillar industry if it develops without meeting people's basic demand for improved housing conditions.

For example, a new financing system could be set up to stop developers from infringing on homebuyers' rights and interests if the current housing pre-sale system, in which prospective homeowners buy property off the plan, is revoked. Housing construction should also be made more efficient.

Moreover, vacant houses should be taxed to increase the costs of possessing multiple homes and to promote a more equitable system.

The government has adopted a wide range of policy and systems in an effort to guarantee all people basic accommodation.

For example, more funds have been pumped or will be pumped into the construction of low-cost housing to help middle and low-income urban residents.

A total of 900 billion ($131.68 billion) yuan is to be invested in the construction of about 10 million flats within three years.

However, such workable government efforts have encountered strong opposition from profit-obsessed developers, who claim that the construction of such a large quantity of subsidized housing will have a huge impact on the country's commercial housing market.

It is estimated that some attendees representing the real estate sector at the two sessions may present motions opposing the government's move.

However, their proposals, which only represent a handful of interest groups and fail to reflect the interests of the majority of ordinary people, are unlikely to be supported by others.

As well as low-price houses for struggling residents, the government should adopt necessary financial policies to help all individuals gain minimum accommodation.

Many official documents and measures have been put in place to realize this, such as No 359 document promulgated by the authorities in 2007 and No 131 document last year. The two documents defined the terms of housing consumption and housing investment. Both also contained preferential credit and tax policies for consumers looking to buy their own places.

Rigid measures will also be taken to control speculative home buying, the documents state. But some developers and their industrial associations have made unrelenting efforts to breach such regulations by cooking up new terms.

At the two sessions, there could be demands for relevant State departments to suspend the measures imposed on purchasing a second house.

Given the government's sober awareness about the fundamental purpose of the real estate sector and its determination to limit risk, the possibility for such proposals being accepted is slim.

The annual sessions of the NPC and CPPCC offer different groups a stage on which to pursue their interests.

But only proposals representing the interests of the majority of people will be eventually accepted by the authorities.

The author is a researcher with the Institute of Finance and Banking under the Chinese Academy of Social Sciences

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