Property tycoon doubts real estate measures

One of China's leading property tycoons, Ren Zhiqiang, the chairman of Hua Yuan Real Estate Group, has questioned the consistency of China's latest market regulations and whether they will be able to rein in the country's skyrocketing house prices.

Attending the Boao Forum for Asia, Ren said the measures had failed to keep China's property price at a reasonable level while hurting the market's autonomy.

"The property control policies have gone wrong from day one," said Ren.

"A series of policies, including the bidding system for land acquisition, the housing credit policy and the public finance system, have actually helped push up China's property prices, instead of cooling them."

He said China's latest moves to curb the property market meant the central government had left the responsibility to local governments.

"The government's message is: 'We hope prices won't continue rising; you (local governments) go and fix them; and if you don't fix them, we will punish you'," the outspoken businessman said.

Ren added that unless the government boosts the supply of land for new homes, China's property prices will not stop rising this year.

He said there was no increase in land supply last year from 2011, and some major cities had only completed 30 percent of their mandated quota, and this shortage in supply had pushed up prices.

"It is as simple as this: How can you rein in meat prices by merely killing more pigs while not boosting the number of pigs?" he said.

Wang Yijiang, a professor with Cheung Kong Graduate School of Business, agreed with Ren that policies had been inconsistent "over the past 10 years".

He added: "Sometimes they have seemed to help push up property prices, while at other times they have been targeted at curbing prices. I'm confused."

The latest policies, which include a 20 percent tax on profits from homeowners' housing sales, have created a secondhand property purchasing spree as people rush to buy before measures are implemented.

Wang said that instead of adding to transaction costs, the government should impose a property tax for high-end real estate, which could add to the cost of owning multiple houses, thus reducing the incentive for investors.

Qin Hong, a researcher with a think tank under the Ministry of Housing and Urban-rural Development, said the inconsistency of China's property measures could be attributed to the country's macroeconomic policy, which sometimes prioritizes cooling off the overheated economy while focusing on bolstering decelerated economic growth.

Ren also said that the property market had been downgraded as a pawn of the country's economic policy, and continual government interventions had messed it up.

A healthy property market would require the government to use market-oriented mechanisms rather than administrative measures such as limiting the number of house people could buy, Ren said.

Tax collected from property transactions last year totaled 1.01 trillion yuan ($162.7 billion), and land transfer fees amounted to 2.69 trillion yuan.

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