Chinese Gov to Curb Rising Land Prices

Some 80 Chinese state owned enterprises whose major business is not in the real estate sector have been asked to stay away from the property business.

The move by China's central government came following massive land purchases by these financially powerful companies, or SOEs, fueled up the dramatic rise of housing prices in the country's major cities and caused public resentment.

XYee has more.

Skyrocketing land prices are backed up by over-competition among bidders in the land market, many of whom are state owned enterprises. This is a conclusion by experts and market analysts. Faced with mounting pressure, the government has decided that 78 SOEs whose major business is not in real estate must withdraw from the land market. Many believe this is a right move, although a little too late.

Vice Chairman of China Real Estate Society, Chen Guoqiang says what happened in China's property market over the past years showed that soaring land prices and high house prices have been reinforcing each other.

"To contain ever-climbing house prices, we must first cope with over-surging land prices."

Vice Chairman of China Academy of Real Estate and Residence, Gu Yunchang, hopes the latest government regulation will dampen efforts of bidding up land prices by some what he called irresponsible profit seekers.

"Land prices are dependant on the supply and demand of land. With some state-owned enterprises pulling out, the total number of competitors would shrink. So this move would pull down the crazy high land prices by some degree."

Over the past years, the Chinese government has issued a number of regulations designed to cool down the heated property market. But few worked.

Chen Guoqiang, Vice Chairman of China Real Estate Society, believes this time around, follow-up measures must be worked out and implemented to guarantee real, effective result.

"Follow-up measures must be put in place to prevent those state-owned enterprises whose major business is not property development from creeping back into the land market."

Meanwhile, experts stressed that the 16 state-owned enterprises whose major businesses ARE in the real estate sector, should play a leading role in maintaining market order and providing government-subsidized housing.

XYee, CRI News.