Clarify housing priorities

The belated move by the Ministry of Construction to clear confusion over its new housing development guidelines is welcome. By defining the space requirement for small houses in a stricter way, the government has demonstrated its resolution to rein in excessive hikes of house prices.

However, to stabilize soaring housing prices and increase supply of affordable homes for the public, the authorities must refocus housing policies respectively around each of these two goals. Combining efforts for the different aims might risk negating them.

Responding to surging house prices and public complaints about a growing shortage of affordable homes, the State Council issued a circular in May to cool down the overheated real estate market.

One requirement was that small apartments no bigger than 90 square metres must now account for no less than 70 per cent of new homes being built.

As house prices have kept rising in recent years, more and more developers have chosen to build large-floor homes to maximize their profits.

All things being equal, the new cap on floor space will lead to an increase in supply of homes with a relatively low total cost, allowing more consumers to fulfil their dream of home ownership. In this sense, the floor space limit is needed.

But the market, more specifically, real estate developers, could not agree on what the 90 square metres includes. It could refer to the sum of the usable floor space and the shared public space in a residential building. It can also mean a home with 90 square metres of usable area while its actual floor area reaches up to 110 square metres. The later is obviously a preferred interpretation among real estate developers.

Such ambiguities have partly delayed the implementation of the cooling measures in most cities and have been perplexing the real estate market.

How to define the space requirement has thus been deemed a litmus test of the government's determination to take a tough line against runaway housing price hikes.

On Thursday, the Ministry of Construction gave an explicit and strict interpretation of the space limit. That is surely a message property developers should take to heart.

Nevertheless, while applauding the effort to dispel confusion over housing development guidelines, we urge relevant authorities to further clarify their policy priorities concerning housing issues.

On the one hand, the government has regarded the booming property sector as a pillar industry that should be properly tapped to sustain the country's economic growth.

On the other hand, the government also keenly realizes its obligation to address the public's basic housing needs.

Stopping short of direct price controls, construction authorities have refrained from stepping too far into a sector where market rules should be allowed to and will prevail.

The floor space limit might serve as a stopgap measure to increase supply of low-cost homes. But in the long run, it is definitely up to businesses and consumers to decide what kind of homes they will build and what they want to buy. As a market watchdog, the government should focus on guarding against any illegal or unfair commercial practices.

As for providing affordable housing for low-income earners, policy-makers at all levels should redouble their efforts and input of public funds for this purpose. A cap on floor space will not make commercial houses an alternative to cheap social housing the government is supposed to offer low-income families.

Source: China Daily