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Building a Long-term and Effective Mechanism for the Real Estate Market to Ensure Housing for all

Source: General Office Date: 2017-04-24


 On April 20, COSC held a thematic seminar on “building a long-term and effective mechanism for the healthy growth of the real estate market”. Counsellors of the Sate Council and research fellows of the COSC agreed at the meeting that the primary goal of the building a long-term and effective mechanism for the real estate market is to address the housing difficulties and ensure housing for all.


 
The Thematic Seminar
 
  “Houses are for living, not speculation.” This is the how the real estate was defined at the Central Economic Work Conference held at the end of 2016. During the 2017 CPPCC and NPC sessions, Premier Li Keqiang, in his government work report, also stressed that housing is for living and local government should fulfil major responsibilities for establishing and improving an effective mechanism for the stable and healthy growth of the real estate market.

How to build an effective mechanism? Xia Bin, Honorary Director of the Financial Research Institute of the Development Research Center of the State Council, said if houses are not assets, then they are consumer goods. This is an issue of direction. We need to abide by both market and social principles. 
 

 
Xia Bin, Honorary Director of the Financial Research Institute of the Development Research Center of the State Council
 
To establish a long-term and effective mechanism for the stable and healthy development of the real estate market, a targeted approach must be adopted to develop policies in keeping with China’s national conditions, for instance, real estate tax. “Such tax must be levied in keeping with China’s conditions and in line with the housing prices in different regions.” Li Qingyun, professor of the School of Economics of Peking University and Counsellor of the State Council, “It is also imperative to include migrant workers into the housing security system. Through shantytown renovation, the housing difficulties faced by eligible migrant workers should be resolved.”


 
Li Qingyun, professor of the School of Economics of Peking University and Counsellor of the State Council
 
The unbalanced supply-demand relationship is also an important reason that undermines instability on the housing market. Che Shujian, Research Fellow of the COSC pointed out that each city should have plans and safeguard measures for the supply of land for housing. The first and second-tiered cities, in particular, should increase the land for housing appropriately and control the land for commercial properties. Measures must be taken to ensure land for affording housing, public rental housing and shantytown renovation.

To strengthen regulation of the financial and banking sectors is equally important for stabilizing the housing market. Excessive investment in the housing market will make it difficult to control the bubbles and bring down the prices. A stable and healthy housing market is also out of the question. Che Shujian underscored the need to effectively control the total amount of credit in the housing sector, regulating the financing activities of the housing sector, and curb the excessive investment in the housing market, so as to prevent excessive credit flows into the housing market. 
 


 
Che Shujian, Research Fellow of the COSC 


 Liu Huan, former Vice Dean of the School of Taxation of the Central University of Finance and Economics

A stable and healthy housing market calls for legal safeguards. “It is important to introduce policies and measures on the use of land after the license expires to stabilize the market and let the public feel assured.”  Liu Huan, former Vice Dean of the School of Taxation of the Central University of Finance and Economics, said that “The Premier has made it clear that the land use will be extended for free after it expires. We are yet to see policies coming out. There must be laws in this regard.” Moreover, some counsellors underlined the importance to improve the housing rental market. It is necessary to regulate the rental relationship through legislation. Clearly defined responsibilities and rights will ensure standardized and orderly rental market. This way, both sides will have their rights effectively protected.