MNI: China Property Experts Say Housing Prices Could Rise More

     BEIJING (MNI) - Property experts attending the Caijing Magazine Annual

Conference here this week said they believe housing prices nationwide --

especially in China's megacities -- will continue to grow, while they also

criticized the government's controls on the property sector.

     Ren Zhiqiang, a former official of the Beijing branch of the Chinese

People's Political Consultative Conference and the retired head of Huayuan

Property Corporation, said Wednesday that "China's housing prices are still far

away from a reasonable level," indicating that more price growth could lie

ahead.

     Ren, an outspoken expert on the property sector who was placed on probation

earlier this year by the Communist Party for his "wrong comments" that

"disobeyed the party's principles and policies," said it was too early to say

that housing prices have peaked.

     He added that the relatively higher prices seen in high-tiered cities such

as Beijing occurred because of "rich people" coming into the cities. China only

has 10 cities where housing prices average CNY20,000 per square meter, compared

with the average national housing price of around CNY7,000 per square meter.

     "All the unreasonable factors of the property sector lie in [high] land

prices," Ren said. 

     He also said a major problem of China's property sector is that there is

"no market pricing signal," and added that the government's tight policies in

the sector had interrupted its normal development.

     Another problem, he said, is that local governments "either do not let

property projects with high prices be sold, or forbid home purchasers from

finishing the signing of contracts online, or they limit the price," he said.

     Ren said China's long-term property mechanism, which the central government

has been championing, needs to be built upon reform of its land system and Hukou

system.

     He said China's Hukou system, a household registration system that records

a person's information such as family and residence and determines if the person

can have access to public services, has partly caused the housing problem. He

said China's quick pace of urbanization had led to large populations working in

or migrating to cities, while their Hukou registrations and homes remained in

rural areas, causing an imbalance of housing supply and demand in cities.

     Li Tie, chief economist and president of the City and Small Town Reform and

Development Committee under the National Development and Reform Commission,

China's main economic planner, said at the conference that the trend of housing

price rises in high-tiered cities such as Beijing will not change in the long

run unless the economy collapses or population inflows into big cities are

reversed. 

     He noted that job opportunities, high-quality schools and hospitals are

overly concentrated in such cities, attracting a large number of migrants and

leading to higher property prices.

     He said a big mistake the government made in its latest round of tightening

policies on the property sector was restricting sales and purchases in cities

that experienced price growth. He said this hurts the "reasonable demand" of

buyers in big cities who cannot afford houses in such cities but would normally

be able to buy in smaller nearby cities, except that the restrictions in the

bigger cities have had a spillover effect into the smaller cities, raising

prices in those cities, too.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

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