2011-01-26 16:47

Supply shortage is the basic reason for the rocketing housing price, and China needs to build a healthy house-leasing market to fulfill the huge demand, State Council advisor Chen Quansheng said at an economic forum held by the China Business on Tuesday.

From 1999 to 2009, the year-on-year growth rates of China's new developed area dropped from the highest 40 percent to the lowest negative 19.9 percent, said Chen.

However, Chen said as people's living standards are improving, more residents want to live in their own apartments.

Chen suggested adjusting the structure of China's property market, saying the country's market only consists of selling and buying and lacks a leasing market.

"We don't have an intermediate region between commercial residential buildings and government-subsided low-income housing projects," he said.

Leasing is not as lucrative as house selling for the owners, which may explain the absence of the leasing market. For this reason, the government should support the leasing market by implementing preferential policies such as tax cuts, he said.

Chen also said that the purpose of the central government's macro-control policy was not meant to suppress the raising price, but to weaken the market's sole depend for buying and selling. He believes the imbalance between supply and demand will drive an increase in prices.

The adviser also suggested that the country should increase the land supply for commercial residential buildings to suppress the raising price.