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Ministry plans more affordable houses to slash prices
(08/09/2001) (China Daily)

More low-cost and affordable houses will be built in the country in a bid to tackle the problem of soaring prices, Minister of Construction, Yu Zhengsheng has pledged.

The ministry will encourage real estate developers to build more low-cost houses by exempting certain fees and deducting some incidental expenses.

China will invest 170 billion yuan (US$21 billion) to build 225 million square metres of budget houses this year, according to the ministry's plans.

In this way, it is intended that more low and middle income people will be able to afford economy houses, helping to bring down the average price, Yu said.

At the same time, the ministry will control the "unreasonable rise" in prices for commercial housing by tightening management of land resources. One way of doing this will be the adjustment of land supply.

It will stop so-called blind development and large-scale construction of luxury houses to prevent new overstock problems.

Nationwide, the price for commercial houses in the first half of this year has witnessed a stunning rise of 11.1 per cent against the same period last year, ministry figures indicate.

The ministry has noted the surge in housing prices in some provinces and cities, Yu said.

In Beijing, the average house price has rocketed to about 6,000 yuan (US$720) per square metre, according to statistics from Beijing Achievement Commerce and Investment Consultants Co Ltd, a local real estate consultant.

It means that the price of a housing unit of 60 square metres is more than 20 times a family's average annual income.

House prices have seen an overall increase of 4.7 per cent between April and June in Shanghai. Increases in house rental prices are around 4.6 per cent, according to the figures of Shanghai Municipal Bureau of Statistics.

The minister also pledged to enhance the macro-inspection system, conduct comprehensive research on the policies of housing taxes and fees, and use the taxation lever to promote the construction and consumption of low-cost economy houses.

The ministry will continue its efforts to ditch unfair fees in housing prices and construction costs and encourage purchase of smaller houses instead of more expensive luxurious homes, Yu said.

"Fluctuations in housing prices have been inevitable in recent years, but the housing price will come down gradually in the long term," said the minister.