Consumers look at models of residential buildings on sale in Tancheng County, Linyi City of east China's Shandong Province, March 22, 2011. (Xinhua/Zhang Chunlei)
China's major cities have been ordered by the central government to introduce property price control measures to curb runaway price hikes. But as the deadline approaches, many cities have remained silent.
Analysts say the results of the latest round of regulations, which have been touted as the toughest yet, will be hard to predict. Although the central government has stated its determination to cap price rises, local governments have not found new sources of revenue to take the place of money gained by selling land to real estate developers.
According to a statement released Tuesday night, Beijing aims for a moderate decrease in the prices of new residential houses in 2011 and has pledged to provide more subsidized and low-rent housing for low-income homes.
First-tier cities such as Shanghai, Guangzhou and Shenzhen aim to decrease real estate price growth by 8 to 15 percent from last year, or lower than the growth of local gross domestic product (GDP) and the growth of per capita disposable income.
"Beijing is so far the first city to target a price decrease, a significant gesture in this round of property price controls," said Yang Shaofeng, managing director of Conworld, a Beijing-based property broker.
The 8 to 15 percent target, however, is still considered "high", as current prices are equivalent to over a decade of income for an average Chinese family.
The Ministry of Housing and Urban-Rural Development said Tuesday that local authorities should take public concern into full consideration when setting price control targets. The ministry also said that targets should be set at more reasonable and acceptable levels.
"Cities that have already published their property price control targets still need to collect public opinions and adjust their targets," the ministry said.
Yang said the targets released for most cities have ignored local residents' income levels, which go against the central government's suggestion.
"This shows that local governments are reluctant to seriously implement property price controls, as they still rely on land sales for fiscal revenue," Yang said.
He said the price-to-income ratio is an important factor in figuring out whether the residents of a given city can afford housing.
Data from the Shanghai-based E-house China Research and Development Institute showed that China's price-to-income ratio was 7.76 in 2010, compared with 8.03 in 2009.
Beijing had the largest gap between income and property prices, followed by Shenzhen, Shanghai, Hangzhou and Xiamen.
China's central government has ordered local governments to release 2011 housing cost control targets by the end of the first quarter of this year. By March 30, only 54 cities out of a total of more than 600 had done so.
