Poor excuses

One Beijinger’s housing solution

According to China’s dominant internet search engine, the most popular phrase typed into its Baidu Knows service last year was: “What should I do if my girlfriend refuses to marry me because I don’t have an apartment under my name?”

It’s no joke: the real estate boom is pricing many out of the marriage market. In fact, increasingly unaffordable property prices stoked simmering social tensions throughout 2010 (TV dramas dwelling on the topic were even pulled off the air – see WiC41).

Policymakers have tried various measures intended to take some of the steam out prices, but to little effect. Less than two weeks into the new year and 2011 isn’t looking much better. And president Hu Jintao has just got a close-up view of some of the frustration.

In late December, Hu visited a single mother living in a newly built community for low-income families in Beijing. The woman, Guo Chunping, told him that she rents her 45 square-metre apartment for “only Rmb77 ($12) per month”. Cue a nod from Hu: “The Party and the government pay great attention to improving people’s livelihood. Now we’ve adopted series of measures, and more are expected to come to improve lives of low-income families.” There was even a presidential smile for the cameras (a rare treat).

But soon after the story aired on CCTV, photos surfaced on the web that seemed to show Guo and her daughter sightseeing in cities like Shanghai and Xiamen. That prompted questions of whether she was poor enough to qualify for subsidised housing.

The background: China’s state-subsidised housing is supposed to be for those who can’t afford homes on the open market. But many gripe that it often ends up in the hands of people who shouldn’t qualify (connected types, often civil servants, see WiC60).

Guo was soon China’s hottest topic. She told New Express Daily that she wasn’t the person in the pictures, and was the victim of an internet hoax. The Global Times was among the newspapers to investigate and confirm that Guo is an out-of-work mother living on just Rmb507 a month. There wasn’t “a grain of truth” in the stories circulating online, the newspaper said, but the fact the hoax was so readily believed did reflect the public mood on topics like inflation, corruption and the “vast” income gap. “That leads to outbursts like the online campaign against Guo, and those aren’t good for anyone involved,” it warned.

Premier Wen Jiabao clearly understands the frustration. In a live radio broadcast in late December, he responded to a listener’s question about rising home prices with trademark dramatic flair. “Your words break my heart,” he wailed, before promising that the government would keep house prices “normal” in his remaining time in office.

That commitment might sound a little ambitious. In his seven years as premier, Wen has expressed his determination to curb property prices on at least a dozen high-profile occasions. But prices have usually continued to rise. The latest data from the National Bureau of Statistics shows that they rose by an average 7.7% year-on-year in November in 70 major cities.

Analysts say local officials are often to blame for the stubbornly high prices. The argument is that they do not want to see prices fall, as they have enjoyed huge windfalls from land sales to developers. Last year land sales rose 70% compared to a year ago, said Xu Shaoshi, Minister of Land and Resources. In some cities they are providing up to 80% of local government revenues.

Beijing’s promise to build more low-income housing is also not keeping up with demand. Experts say the country needs to build more affordable homes this year than the 10 million units planned. Last year 3.7 million units were completed, according to government data.

Further to Wen’s on-air promise, there have also been signs of activity. After years of debate, Chongqing and Shanghai have been given the green light to introduce a property tax, says the China Daily. Analysts reckon the move will curb speculation in the cities. The planned tax will likely be implemented in the first quarter of this year, though details are still lacking.

Keeping track: Will a new property tax tame China’s priciest real estate market, Shanghai? As of January 28 a 0.6% annual tax was imposed on the value of homes sold in the city. Last week new home sales surged 16%, while prices on units sold rose 8%. But on the day the tax came into force the trading volume of new homes sales plunged 40%, suggesting the levy was working (as hoped) in putting some buyers off. “Apparently, the property tax has started to have an effect on the housing market,” surmised Lu Qilin, the deputy director of Uwin RealEstate Research Centre. （4 February 2011）

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