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Curb surging house prices

(China Daily)
Updated: 2006-04-25 06:33

More action should be taken to curb soaring house prices, says a signed article in Market News. An excerpt follows:

Stabilizing house prices has long been an important goal of the country's macro-control measures.

However, the term "stabilizing" has also left a lot for property developers and house buyers to imagine. It can be understood as the government's aim for prices of houses neither to mount further nor to drop, but to execute a soft landing.

The question is on what basis should the prices of houses be stabilized?

If the government is to keep stable the current unbelievably high prices, then solving the housing problem of the masses means a dramatic increase in their incomes. This, however, will be difficult to realize.

Provided that the government is well aware that current house prices are twisted and unreasonable, then "stabilizing the price" should be understood as the government's determination to restore prices to a normal level through macro control.

Over the past year, little has been achieved in curbing soaring house prices through macro-control measures, including the re-adjustment of the structure of housing supply. In newly developed property projects, large or extra-large houses are still an overwhelming majority while lower-cost houses account for only a meagre proportion of the market.

The real estate market is a special one, especially in a densely populated country like China.

In general markets characterized as being open to free competition, the prices of commodities can often be regulated and balanced through changes in supply and demand.

Housing, however, is a kind of special commodity. Furthermore, given the country's enormous population and the accelerated urbanization process, pure market regulation in the property market appears inefficient in curbing rising prices and meeting people's needs.

(China Daily 04/25/2006 page4)