Real estate forum urges reform of govt policies

A deep reform of the country's current controversial policies and mechanisms for the housing market is urgently needed so as to avert potential government mistakes, a group of Chinese experts said at a forum in Beijing Monday.

"Current control measures for housing prices have veered far from the original goal set up 15 years ago for the country's reform," Meng Xiaosu, board chairman of the China National Real Estate Development Group Co, said at the forum, which was held by financial news portal caijing.com.

China's housing reform has had a bumpy ride since it started in 1998, when the State Council released a document requiring an affordable housing system for lower income families as well as the construction of commercial residences to establish a market-oriented economy.

But in 2003, the State Council released another document that aimed to make the housing market fully market-oriented by setting a goal for most families to be able to purchase or rent commercial housing.

Later, the government found full marketization led to dramatic price growth in 2007, so they returned to efforts to build affordable housing and control prices of commercial housing.

"Historically speaking, it is obvious that the government policies either concentrated on affordable housing or commercial housing, but failed to develop the two types of properties simultaneously," Meng noted.

"The new administration of the central government needs to 'walk on two legs,'" Meng said.

Dai Xiaojing, Executive Director of SEEC Media Group, said at the forum that the Chinese property market, which is a pillar of the country's economy, would soon see the end of over a decade of fast development if no substantive reforms were executed.

"The Chinese government has been focusing on limiting people's demand for apartments in the past 10 years, rather than on reforms of land and taxation mechanisms," Dai noted.

On April 10 of this year, the State Council announced policies limiting home purchases that have since been executed in over 40 cities across the country.

But home prices in major cities have grown continuously since 2009 regardless of government policies. Prices of newly built homes in 63 out of 70 major cities still grew month-on-month in June, the National Bureau of Statistics (NBS) has said.

In major cities like Beijing and Shanghai, prices of newly built homes rose year-on-year in June by 15.3 percent and 13 percent respectively, according to NBS data.

To improve the mechanism of the Chinese property market, "the new administration of government needs to rethink the current land policy, which is a major factor that will impact the property market in the future," Zhu Zhongyi, secretary-general of the China Real Estate Association, said at the forum.

In China, local governments are heavily dependent on land sales as a revenue source, and that means they have the incentive to boost the property prices.

"The government needs to learn from previous experience and launch more specific measures to reform the property market," Zhu said.