CPPCC member urges govt to rein in property market forces

Residential buildings in Shijiazhuang, north China's Hebei province [File Photo: Xinhua]

Against the backdrop of rampant property price hikes in the past year, affordable housing has become a hot topic for this year's session of China's top political advisory body, the Chinese People's Political Consultative Conference, or CPPCC. 

Some of its members are calling for greater efforts to be made by China's central government to rein in market forces to address this issue.

CRI's reporter at this year's session, Liu Kun, has the details.

David Li Daokui, CPPCC national committee member and an influential economist in China.

He currently serves as director of the Center for China in the World Economy at the School of Economics and Management, also dean of Schwarzman Program at Tsinghua University. 

David Li Daokui [File Photo:Baidu]

Li has urged the central government to step in to correct the country's property market failure that has prevented mid-income groups in first tier cities specifically from owning a home. 

"In first tier cities, the fundamental problem is that we rely too much on the market mechanism. And in the housing market, frankly speaking, the market mechanism might be too draconian, too wild to be relied upon. So there's a call for the government to step in, to remedy the market failure." 

There is special concern for those described as the "housing sandwich class." These are middle-income citizens in the country's big cities who are seen as the backbone of various social units, either in families or at work, who are caught in a dilemma of neither meeting the requirements for budget homes, nor being able to afford commercial housing. 

32-year-old Lin is a civil servant living in Beijing. He says he previously applied to the "homes for non-investment purposes project". The project is a government initiated affordable housing plan and provides apartments at prices lower than the market level. He failed to secure an apartment from the project simply because, he says, there were just too many applicants in Beijing.

"I started applying to the project when it first came out, and in 2014 so many were applying that a lottery policy was introduced. I guess the number of applicants was just too big. Anyway I didn't get it. Then approaching the end of 2014 I was getting married and really needed my own apartment, I had to resort to commercial housing." 

Lin now lives in a one-bedroom apartment with his wife and two-year-old daughter. The family now has a mortgage, and has little money left at their disposal after paying the monthly debt. 

Saleswomen promote a property at a housing fair in Haikou, Hainan province. [Photo: China Daily]

Wang Dan, an analyst from the Economist Intelligence Unit, believes government policies on this issue in the past few years haven't been successful.

"What they have done so far received very little impact for those people who actually want to buy a house. They tried to build more affordable housing and tried to expand the range of the people who are qualified to apply to this kind of housing. And so far the affordable housing project is still very limited and there are not enough built. It's just a difficult situation".

To address housing problems of the so called 'sandwich class', David Li Daokui suggested that the central government should request local governments to use a certain portion of their revenue to develop public renting programs. 

"My suggestion as a member of the CPPCC is for the central government to regulate that local governments who sell land to put aside a significant, say 30 per cent of the revenue of land sales to develop apartments, or apartment buildings, to be rented out to the sandwich class. So this is basically missing in major cities in China."

Li also said that China should learn from Hong Kong and Singapore, both of which have practiced public renting policies for a long time. 

He cautioned that if not dealt with well, housing problems for the mid-income group in China's mega cities could cause labor costs to rise and create a human capital crisis for certain industries.

For CRI, this is Liu Kun.