03/09/2011, 00.00
CHINA

China to spend 1.3 trillion yuan to cool housing market

Housing prices are rising despite government attempts to rein in market speculation. Beijing announces plans to build 10 million new housing units for low-income families.

Beijing (AsiaNews/Agencies) – In 2011, China plans to invest 1.3 trillion yuan (US$ 200 billion) to build 10 million housing units for low-income families priced out of the housing market by unfettered speculation, Deputy Minister of Housing and Urban-Rural Development Qi Ji said in an announcement. In his statement, he slammed speculators for leading to “unreasonable” prices.

“China’s problem with home prices will be gradually solved with the implementation of government policies and the strengthened responsibilities of local governments,” Qi said.

The central and local governments will provide some 500 billion yuan in funding. Companies and families benefitting from the programme will provide the rest. Easy loans, subsidies and tax incentives will also be offered to people who build their own home.

In the meantime, housing prices continue to climb, for a 19th month in a row in December. Experts expect however that home prices will rise only 0.5 per cent in February, the slowest monthly gain since August.

So far, government action has had little impact. Measures include raising the minimum down payment for second-home purchases and introducing taxes for homes in Shanghai and Chongqing where prices are higher.

Experts are divided over such policies. Some believe prices should drop in the near future, whilst others think they will continue to rise because of ongoing migration towards big cities.

A few days ago, Prime Minister Wen Jiabao told the National People’s Congress that his government would “resolutely” press ahead with controls on the property market to curb speculation. The government would also “severely punish” irregularities in the real-estate market, implement differentiated credit and tax policies.

The high prices of housing and essential items, like food, are chipping away at middle class incomes. The government is very concerned that inflation–related hardships might lead to social protests.

Indeed, not only has the government failed to rein real estate speculation, but big state corporations have been accused of engaging in speculative activity themselves.

Printable version
CLOSE X
See also
Crisis in China: 64 million empty apartments
15/09/2010
Chinese inflation remains high, economic growth slows
17/07/2008
Beijing, housing market collapses: down 50% in one year
16/04/2011
80 percent of Vietnamese cannot afford to buy a home
23/04/2008
Shanghai adopts new measures against real estate speculation
08/10/2010