Chinese Media Look for New Property Approach as Policies Fail

Two of China’s leading official newspapers publishes critiques of the nation’s attempts at controlling home prices last week, as home prices have continued  to rise despite several rounds of new restrictions over the past four years.

While none of the sources quoted by the newspapers were high-ranking officials and new policies were not specified, the criticism of the existing policies by the state-run media organisations appears to endorse a more market-driven approach.

China Daily Questions Property Tax Scheme

A report in the state-run China Daily criticised the failures of the trial property tax initiatives in Shanghai and Chongqing, noting that the country’s leadership has yet to make a decision regarding expansion of the trial programs since they were rolled out in 2011. The Daily commented,

“It has been three years since China launched trials of property ownership taxes in Shanghai and Chongqing, but the goals of the duties, which include combating speculation in property market and reining in the home price rises, are far from being achieved.”

Despite the existence of the property tax, Shanghai had some of the fastest growing home prices in the country last year, with the average price of homes rising more than 15 percent per year for the last several months of 2013. The trial property tax currently in existence has significant carve outs that mean most home-owners pay no tax, and those that are liable pay only minimal duties.

The Global Times Looks at “The Five Rules”

The second set of criticism came from the Global Times, an English paper published by The People’s Daily Group, which is the official news organisation of the Communist Party. In describing the effectiveness of latest round of property policies The Global Times story said,

China’s so-called “national five rules,” which had been implemented for a year as of Thursday, appear to have failed to curb the rise in home prices and cool down the property market, analysts said.

The rules require the authorities to suppress speculative buying, increase land supply for housing and speed up the construction of affordable housing projects. However, the article noted that out of 70 cities tracked by the National Bureau of Statistics, only one city – Wenzhou in East China’s Zhejiang Province – saw new home prices fall in 2013.

The paper did give a semi-official spokeperson the chance to explain the limited performance of this latest round of measures, by interviewing Chen Guoqiang, deputy head of the China Real Estate Society. Chen, whose industry association is sanctioned by the government, commented,

“The public should view the effects of the five rules in a more comprehensive way,” Chen said. “In general, it had some positive effects on the housing market.”

Chen emphasised that although home prices were still rising, the new policies had facilitated the construction of affordable homes and increased the supply of land for housing.

What Policies to Expect Moving Forward

One of the viewpoints that the Global Times chose to highlight came from Hui Jianqiang, research director at real estate information provider Beijing Zhongfangyanxie Technology Service Co, who pointed out the Xi administration’s reluctance to use administrative measures to control the housing market.

“The five rules require the government to put tighter controls on the housing market, which is contradictory to the current leadership’s general policy of letting the market play the decisive role,” Hui said. “That was partly why the central and local authorities refrained from carrying out the rules strictly last year.”

Although implemented shortly after the Xi government took power at the start of 2013, The Five Rules are largely seen as a program that was inherited from the Hu Jintao government.

The Global Times wrote extensively of the potential for the government’s public housing initiative, which is intended to provide affordable homes for low and middle-income families. The party newspaper noted that,

There has been criticism of the high home prices in Beijing, but media ­reports in September said the municipal government had vowed to provide 20,000 units of government-subsidized affordable apartments for households with limited income in 2013.

The story added that 50,000 such apartment units were in the pipeline for 2014.