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Beijing fails to curb soaring home prices

The Chinese government has admitted to failing to curb soaring home prices, blaming local officials for not doing enough to ensure sufficient housing supply, state media said yesterday.

The National Development and Reform Commission, China's top planning agency, will make lending and taxation policies more targeted in order to improve the situation, the China Daily reported, without elaborating on the new measures.

From January to August, sales of houses increased 30.9 percent from the same period last year and supply has had problems keeping up with enormous demand, the paper said.

"Some places have failed to act more actively to adjust the structure of house supply and stabilize house prices," the paper quoted the National Development and Reform Commission as saying in a statement.

The commission said the failure amounted to "dereliction of duty" on the part of some local officials, citing an offense punishable by lengthy jail terms in China.

Most importantly, local officials have not met targets for the construction of relatively small apartments of less than 90m2, the paper said.

Government policies dictate that 70 percent of all new homes being built must be of this modest size, but at present less than 25 percent falls into this category.

Land set aside for building houses has also not been developed in a timely manner, while some developers have hoarded land and houses to profit from rising prices, the paper said.

As part of new measures unveiled last week, the downpayment requirement for people buying a second home was raised to 40 percent from 30 percent.

China has since 2005 taken a lengthy series of steps -- including interest rate hikes and imposing taxes -- to curb rapidly rising real estate prices amid concerns of a dangerous bubble in the sector.

But apparently these measures have been to little avail.

Property prices in 70 major cities across the country rose 8.2 percent in August from a year earlier, the fastest so far this year, official data showed.

Property prices in Beijing were up 12.1 percent in August year-on-year and 20.8 percent in southern Shenzhen.
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