The Ministry of Housing and Urban-Rural Development has urged the local governments of some cities where the realty markets are overheated to strengthen their real estate regulations to eliminate all possible room for speculation.
Following the ministry's call, the local governments of cities where housing transactions have heated up have introduced tougher measures to plug any policy loopholes that speculators have been taking advantage of, and all State-owned commercial banks have raised their interest rates for mortgages.
Local governments should not underestimate hot money's ability to move quickly. Were it not for the central authorities' preemptive and tight control, speculators would have targeted the real estate markets in Xiongan New Area and the Hainan Island, where China will build the world's largest free trade zone.
Only when the local governments realize that high housing prices do not only equate to economic prosperity, but rather present a risk to it, will they take the initiative to keep housing prices within a rational range.
It remains difficult, if not impossible, for local governments to quit their inclination to connive in beefing up unrealistic housing prices, since they still rely on the revenue from land sales as their main source of income.
Despite this, local governments have no reason to shirk their duty of building enough subsidized houses to meet the demand of their low-income populations. But regretfully there is still a long way to go for some cities in this regard.
Governments and banks must avoid putting first-time homebuyers in their cross hairs while cracking down upon speculators, because their demand is rational and should be distinguished from that of speculators.
Local governments must rationally determine the scale, structure and timing of the supply of housing and land. Once the local real estate market fluctuates, local governments must assume the main responsibility for stabilizing housing prices and controlling rent. In other words, the real estate regulation must adjust measures to local conditions and the strategy of the city, but the "tight" tone for regulations and stability are consistent throughout the country. (Source: China Daily)
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