Housing prices, local governments count

Whether the real estate market will become the savior of the Chinese economy has again become a focus of public attention. Several central government authorities have said various times in the past 10 days that the government will not relax its control on the real estate market.

The statements were clearly made to reassure the public about the central government's determination to maintain control so that housing prices will not rise as in 2009.

But the public seems difficult to persuade.

Unlike verbal reassurance, the cut in interest rates on loans and the warming up of the market in some cities are real, concrete facts.

Sales of commercial houses from January to May increased by 3.8 percent year-on-year and the prices by 3.4 percent. During the past two years, 29 local municipal governments tried to adjust their control policies on real estate markets. The adjustments of 25 governments were finally passed and implemented.

The land market has recently been heating up again in many places. The average cost of land transfer deals in 20 big cities was 14.6 percent higher on average than the benchmark price this month.

Many factors influence housing prices. Although the central authorities send out signals they will maintain control, the public wonders whether local governments will comply. Past experience in 2008 and 2009 indicates that the public's concern is well-founded and local governments should clarify their intentions now to relieve anxieties, given that the real estate market cannot save the Chinese economy in the long run at all.