The Chinese media have lately devoted much space to criticizing the skyrocketing real estate market and called attention to the urgency of bringing it under control. The following are excerpts from two articles.
Test for government
A commentary by the Xinhua News Agency run by several newspapers calls for government regulation in bringing down house prices.
Last year's macroeconomic measures have discouraged investment in real estate to a certain extent. However, a number of factors - the large demand and a rise in investment and speculative purchases, etc - have caused an unusually rapid growth in house prices in some cities.
Now that real estate has become a pillar industry in China, the red-hot house prices have not only made houses unaffordable for a large number of common folks, but also may add to the credit risks for banks. In addition, related industries, such as those of construction materials, may also be affected, which may lead to increased inflationary pressure.
The issue of housing concerns the well-being of millions of households and the flow of social wealth. Therefore, housing prices cannot be left completely to the "invisible hands" of the market and the government should play its due regulatory role. Officials in charge should be held responsible if their regions witness abnormal price ups and downs due to ineffective measures which eventually affect economic and social growth.
To meet the demand of families of low and medium incomes, local governments should build more ordinary and cheaper apartments and increase the land supply for such projects.
Enhanced planning and management should be in place concerning the demolition of old buildings to avoid more pressure on the demand. Governments should also make use of land, tax and financial policy tools to control investing and speculative purchases.
Real estate no way for
sustainable growth
An article by Lu Ning in the Oriental Morning Post says that the "housing economy" is not the direction for Shanghai's sustainable development.
In recent years, the increase in Shanghai's housing price index has exceeded the local average annual GDP growth rate and surpasses the actual annual income rise of its citizens. By the end of last year, the real estate industry had become the second largest engine for growth following the information industry.
The so-called "housing economy" is a result of various factors. Capital influx for real estate investment brought by global optimism in the economic development of China, and Shanghai in particular, is one of the main reasons. Due to the imbalanced information flow, the government's inexperience with regulatory measures and an imprecise understanding of "development", Shanghai has relied heavily on the "housing economy" to boost its economy.
Despite the recent macrocontrol measures taken by the municipal government to cool the real estate market, we have to point out that in the long run, the "housing industry" - though it may still be one of its pillar industries - cannot be the direction for the city's sustainable growth.
Obviously, Shanghai can only go for a developing mode featuring innovation. It is an outstanding problem now that we rely too much on the real estate market which yields quick money.
Governments at all levels should do more in the way of long-term planning and co-ordination of future economic and social development of their regions rather than adopting a short-sighted attitude to connect their achievements at work with the local real estate market.
(For more on Shanghai's real
estate market, see "Measures of calm," page 7)
