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China prepares fixed sales prices on homes

Updated: 2011-03-17 11:18

By He Wei and Wang Ying (China Daily)

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SHANGHAI - China is preparing to introduce a fixed-sales-price regulation to rein in its white-hot property market, following the initial effects of recent tightening measures, a senior official with the National Development and Reform Commission (NDRC) said on Tuesday.

Xu Kunlin, director-general of the pricing supervision department of the NDRC, made the remarks at the 2011 World Consumer Rights Day Forum, co-sponsored by the China Consumers' Association and NDRC, the Securities Times reported on Wednesday.

While details of the plan have not yet been disclosed, Xu told the forum that the measures will require developers to publicize their property prices and the number of apartments available for sale within a certain time frame.

The measures, intended to help regulate the real estate market, will also be extended to related service sectors, Xu said, such as commissions and property management fees.

Xu said China's property market is ripe for a fixed-price regulation.

Confidence in the country's property sector is running high, despite a raft of borrowing and buying restrictions enacted in recent months as the government seeks to rein in soaring prices.

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As part of the efforts to stem a flood of liquidity, fixed-price measures for regulating the housing market have symbolic implications on Consumer Rights Day, said Ma Ji, a senior manager with the research and information department of Centaline Property Agency in Shanghai.

"After 20 years in operation, problems and loopholes have started to emerge in China's property market. The steps show the central government's determination to improve and upgrade the real estate sector," Ma told China Daily.

But Ma said he remained cautious on the actual effects of implementing the policies, because sales control remains a debatable tool for supervising the market.

"Fixed prices deviate from the essence of market economy, where developers strive for the biggest margins. Once set, the prices are not subject to change. But housing prices are prone to fluctuation, owing to transportation construction projects and cultural fairs, such as the 2010 Shanghai Expo."

Chen Sheng, director of the China Index Academy in Shanghai, echoed Ma's view. He said the regulations should rule out the possibility of excessive intervention of the market.

"It will be positive if the policies are designed to protect the rights of ordinary homebuyers during property transactions," Chen said. "But if they were used as administrative leverage to curb prices, the rules would undermine the rights of property developers and dealers."

The rapid surge in China's housing prices has made a compelling case for prompt and concentrated price-control policies. The latest measures include an increase of the minimum downpayment for second-home buyers to 60 percent from 50 percent, the imposition of home-purchasing restrictions in more cities, and the introduction of property taxes in Shanghai and Chongqing.

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