Guangzhou aims to cool property
market By Sally Wang
The municipal government of Guangzhou,
provincial capital of Guangdong in southern China,
has introduced tough new measures to cool down the
property market, after its mayor stressed that
curbing soaring housing prices has become a
"political issue".
"Housing prices in
Guangzhou are high, yet continue to go up rapidly,
which has become a major concern. Housing is now
not just an economic or social problem, but rather
a political issue," said Mayor Zhang Guangning at
a government meeting late last month. The remarks
have since been frequently quoted by the
Chinese media in stories
about the national housing problem.
Analysts say Zhang's words show that
Guangzhou's government now realizes that it would
be "politically incorrect" if it failed to
implement the central government's macroeconomic
controls to curb housing prices.
The
central government has imposed macroeconomic
controls for the past three years with a goal of
cooling down the property market. However,
property markets in major cities remain defiant,
hitting new highs after Beijing has toughened its
stance.
Property developers are making a
killing from the booming market, which
macro-controls have failed to cool, according to
the "Report on the Top 100 Real Estate Developers
in China in 2007". The report shows that
investment by the top 100 real-estate developers
totaled 2.4 billion yuan (US$310.5 million) in
2006, up 43.4% year on year. The rate of growth is
4.6 percentage points higher than in the same
period of 2005.
The top 100 real-estate
developers reported record high sales volumes and
operating revenue in 2006, with average figures
reaching 2.26 billion and 2.71 billion yuan each,
up 35% and 29% year on year respectively. Their
net profit grew by 38.7% on average.
According to statistics from the National
Development and Reform Commission, housing prices
in 70 large and medium-sized Chinese cities
climbed 5.6% on average in January. The growth
rate was 0.2 percentage point higher than the
previous month. The statistics showed prices
jumped 10.2% in Shenzhen, 9.9% in Beijing, and
8.9% in Guangzhou.
In Guangzhou, the
average price of housing rose from 3,888 yuan per
square meter to 7,729 yuan in February, up 100%.
In China, skyrocketing housing, education
and medical-care costs have become the three major
sources of growing public discontent. In
Guangzhou, even middle-ranking officials have
begun to complain about high housing prices.
Ding Jianhua, deputy chief of Guangzhou's
Tianhe district, openly said at a government
meeting on January 21 that he rented an apartment
in Guangzhou and didn't own his own home because
he could not afford one. "Civil servants can
hardly afford to buy housing on their regular
incomes," he said.
Chen Kaizhi, former
vice mayor of Guangzhou and ex-chairman of the
Guangzhou municipal committee of the Chinese
People's Political Consultative Conference, then
made similar remarks during a media interview.
"The average housing price in Guangzhou is 8,000
yuan [per square meter], which even I cannot
afford," he said.
However, Lin Shusen,
former Guangzhou party secretary and now governor
of Guizhou province, disagreed. He said: "The
average housing price in Guangzhou is lower than
in Shanghai, Beijing and Shenzhen. Some senior
officials live in apartments as large as 200
square meters, and still say they cannot afford to
buy housing. Of course they have to pay more if
they want to own a second home."
In a few
months, the Chinese Communist Party is to hold its
17th National Congress, which is expected to adopt
President Hu Jintao's idea of building a
"harmonious society" as the new party line. It is
expected that Beijing will tackle problems deemed
to be a threat to "social harmony", and in doing
so win public support. From this perspective,
Zhang was right to point out that housing has
become a political issue.
Shortly after
Zhang made his remarks, the central government
announced its decision to send teams to
investigate and crack down on collusion between
officials and developers in the property sector,
which has been blamed for the failure of Beijing's
macroeconomic controls.
After the mayor's
remarks, Guangzhou municipal government announced
seven measures to curb rising housing prices in
the city: increasing the supply of land, speeding
up construction of government-sponsored low-cost
housing, speeding up reconstruction of old
districts, taking back land lots that have been
left idle for long, strengthening market
regulation and management, and simplifying the
approval procedure for land requisition.
Zhang said he was confident that these
measures would bring down Guangzhou's housing
prices. He even advised middle- and low-income
people to refrain from buying housing at this
stage, hinting that they could buy at lower prices
later.
But observers remain cautious,
saying it is important that such measures, good as
they may sound, be implemented effectively. Last
year, the Guangzhou government sharply increased
land supply in the hope of bringing down housing
prices. However, land prices were pushed higher by
developers in public bidding to justify
housing-price hikes.
Some property
developers in Guangzhou are not moved by the new
government measures, saying it is impossible for
the government to curb housing prices. Some even
increased prices immediately after the municipal
government announced the measures.
Now the
government must show its determination to carry
out the measures in its confrontation with the
developers, observers say. If the measures can be
carried out to the letter, insiders expect that
the imbalance between supply and demand will be
corrected and surging housing prices in Guangzhou
could be checked in the second half of this year.
In any case, Guangzhou is the first major
city in China to take significant actions to curb
housing prices. If it is successful, other cities
are likely to follow. If it fails, then indeed
housing will become an even hotter political
issue.
Sally Wang is a freelance
writer based in mainland China.
(Copyright 2007 Asia Times Online Ltd. All
rights reserved. Please contact us about sales, syndication and republishing.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
