Clarify housing priorities
(China Daily)
Updated: 2006-07-15 09:17
The belated move by the Ministry of Construction to clear confusion over its
new housing development guidelines is welcome. By defining the space requirement
for small houses in a stricter way, the government has demonstrated its
resolution to rein in excessive hikes of house prices.
However, to stabilize soaring housing prices and increase supply of
affordable homes for the public, the authorities must refocus housing policies
respectively around each of these two goals. Combining efforts for the different
aims might risk negating them.
Responding to surging house prices and public complaints about a growing
shortage of affordable homes, the State Council issued a circular in May to cool
down the overheated real estate market.
One requirement was that small apartments no bigger than 90 square metres
must now account for no less than 70 per cent of new homes being built.
As house prices have kept rising in recent years, more and more developers
have chosen to build large-floor homes to maximize their profits.
All things being equal, the new cap on floor space will lead to an increase
in supply of homes with a relatively low total cost, allowing more consumers to
fulfil their dream of home ownership. In this sense, the floor space limit is
needed.
But the market, more specifically, real estate developers, could not agree on
what the 90 square metres includes. It could refer to the sum of the usable
floor space and the shared public space in a residential building. It can also
mean a home with 90 square metres of usable area while its actual floor area
reaches up to 110 square metres. The later is obviously a preferred
interpretation among real estate developers.
Such ambiguities have partly delayed the implementation of the cooling
measures in most cities and have been perplexing the real estate market.
How to define the space requirement has thus been deemed a litmus test of the
government's determination to take a tough line against runaway housing price
hikes.
On Thursday, the Ministry of Construction gave an explicit and strict
interpretation of the space limit. That is surely a message property developers
should take to heart.
(For more biz stories, please visit Industry Updates)
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