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Premier Wen Jiabao: China’s “housing prices will drop to a reasonable level”

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Will the premier roll out the tanks if RE prices don't fall! Time to find out how effective a high control government will be effective at popping a bubble being generated by Ben's QE policy.

link

According to the China Daily, China’s Central Government plans to strengthen policy in 2011 designed to cool the property bubble in China. The announcement came a day after China’s Central bank increased the one year benchmark lending rate by 25 basis points to 5.81 percent in a further bid to curb spiraling home prices. The benchmark deposit rate increased to 2.75 percent. On December the 3rd, the central bank said it would adjust monetary policy in 2011 from relatively loose to prudent in a bid to tighten the supply of hot money fueling inflation.

China’s Premier Wen Jiabao acknowledged in an interactive radio broadcast on the 26th December current policies designed to cool the market has not achieved satisfactory results.

“I made a promise to the Chinese people last year that I would try to keep housing prices at a reasonable level during my tenure, and I won’t shrink from that goal,”

“I believe that, through our consistent efforts, housing prices will drop to a reasonable level.

According to Minister of Housing and Urban-Rural Development Jiang Weixin, the government plans to introduce more favorable policies to assist people who want to purchase a house to live in, while restricting the purchases of homes intended for investment and speculation. In April 2010 the government raised the minimum deposits for families purchasing second homes, and for first home buyers. It also restricted banks from offering mortgages for third homes in some of the larger cities such as Beijing & Shanghai. “These measures have helped contain speculative demand to some extent,” Jiang said, “And this year we will continue to limit mortgage loans for buyers of second and third homes in major cities.”

Many Chinese hold vacant property as a means of investment. Most have never seen house prices fall, and with deposit rates low, speculating on capital gains from housing provides better returns. In August 2010 there were reports that 64.5 million urban electricity meters recorded zero electricity consumption over a 6 month period, and predictions the 64.5 million vacant apartments could home over 200 million people. In survey results published in “Property Monthly” dated the February 10, 2010 by China Reality Research, nearly a fifth of all recently sold properties were kept vacant.

» Govt reveals new-year pledge on housing prices - The China Daily, 1st January 2011.

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Chinese city considers property tax

Chongqing, a sprawling southwestern municipality in China about the size of Maine, may soon introduce the nation’s first property tax. The plan, which was reported in state media Sunday, would be aimed at high-end housing, seen as driving increasingly unaffordable property prices. Policymakers have long been toying with the idea of a property tax in various major cities to help rein in runaway prices, one of the chief complaints among ordinary Chinese.

The challenge has always been how to do it. Cities would have to build from scratch a database of ownership and housing values. (Think of all the government officials who would be exposed for owning too much property, critics say.)

You just get the feeling that as crazy as things are here they might be even crazier over there!

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“I made a promise to the Chinese people last year that I would try to keep housing prices at a reasonable level during my tenure, and I won’t shrink from that goal,”

“I believe that, through our consistent efforts, housing prices will drop to a reasonable level.”

That is the kind of thing Labor took to the Kevin 07 election.

Maybe they should introduce a first home buyers grant. That is the policy we adopted in Australia to give first home buyers a helping hand into the market...

At least from what I can tell each of the policies being adopted will actually put brakes on their house prices. In Australia we say one thing and then do something completely different.

I thought political spin doctoring and propaganda were more common in centralist or authoritarian regimes.

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Double pricking the bubble:

http://www.chinadail...nt_11850242.htm

China to build more low-cost apartments

By Jin Zhu (China Daily)

Updated: 2011-01-14 07:50

10 million units to be constructed for low-income families this year

0023ae6962090e99d44161.jpg

Beijing - Construction of government-subsidized apartments accelerated in 2010, as part of a major effort to curb soaring property prices and provide housing for low-income earners.

Related readings:

0023ae6962090e99d35e5d.gifGovernment's comfortable housing project in Tibet

0023ae6962090e99d35e5e.gifPingdingshan provides low-cost housing

0023ae6962090e99d35e5f.gifHigh-end housing still a hot property

0023ae6962090e99d35e60.gifBanks urged to lend more for affordable housing projects

The country last year started construction on 5.9 million subsidized apartments for low-income residents and shantytown dwellers, exceeding its original target by 100,000.

About 3.7 million subsidized houses had been completed by the end of December, Ministry of Housing and Urban-Rural Development figures showed.

The central government's 80.2-billion-yuan ($12.14 billion) investment in affordable housing last year surpassed any other year's, Minister Jiang Weixin said at the annual working conference in Beijing.

China started to commercialize housing in 1998. The move was made in concert with plans to provide affordable homes to low-income residents.

But local governments have been less than enthusiastic about constructing subsidized housing in recent years, because such projects require they supply potentially lucrative land for free.

The affordable housing projects generate especially huge losses for local governments in big metropolises and some second-tier cities, where property prices have continued soaring. They could otherwise sell the land for vast amounts of money and increase their revenues.

Land transfer fees have significantly contributed to local governments' incomes.

The fees generated more than 7 trillion yuan nationwide over the past five years, Ministry of Land and Resources figures showed.

The amount last year was 163.67 billion yuan in Beijing, which topped the nationwide list of cities with the fastest-growing housing prices.

To ensure local governments supply land for subsidized housing, the central government in May signed agreements with 31 provincial, municipal and autonomous region governments, as well as with the Xinjiang Production and Construction Corps. The central government has urged local governments to start construction before the end of July.

The move is viewed as a major push by the central government to address the housing problem after the National People's Congress - the country's top legislature - reported last year that provincial governments failed to fulfill their 2009 affordable housing construction goals.

Qi Ji, vice-minister of housing and urban-rural development, said in an online interview in May: "Local governments are responsible for ensuring the availability of land and for building more low-rent housing for low-income earners. A responsible system must be established to exercise effective supervision over the buildings' construction and quality."

More than 2.2 million hectares of land were earmarked for construction from 2006 to 2010. Of these, 45,333 hectares were set aside for subsidized housing, government figures showed.

The country has provided subsidized apartments to 11.4 million low-income families in urban areas over the past five years.

Land and Resources Minister Xu Shaoshi said the ministry will guarantee land for the construction of 10 million affordable homes this year.

However, the public has voiced concerns about construction quality and living conditions, as media have reported about several projects that were shoddily constructed or remotely located.

About 500 families in a subsidized community in Beijing's Chongwen district complained about rain leaking into their homes in October 2009, local media reported.

In December 2010, it was discovered that a 107,000-square-meter project that included 15 subsidized apartment buildings in Wuhan, capital of Central China's Hubei province, had been built on toxic land that had been polluted by a chemical plant that previously occupied the site.

The Ministry of Housing and Urban-Rural Development has urged its branches at all levels to strengthen construction-quality supervision and focus on building public housing this year, the minister said.

Local governments have started to set targets for this year but have not released details.

But the insufficient funding that stifled such projects in recent years will become an even greater obstacle in 2011, analysts said.

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so you can expect local councils to relase the crap[ land for free, you know near toxic factories or on flood plains,.

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The fees generated more than 7 trillion yuan nationwide over the past five years, Ministry of Land and Resources figures showed.

This is nearly 1 trillian USD. Assuming 1 billion people in China it is nearly $1,000 USD per person. Even assuming a bubble the number seems high.

http://www.worldsalaries.org/china.shtml

I thought the newspaper would try to reduce the total.

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