CRI听力:Real Estate Market Needs Long-term Solution

At a press conference during the annual session of the CPPCC, China's top advisory body, advisor Li Daokui, a renowned economics professor at Tsinghua University, says that the Chinese real estate market will see prices continue to decline this year; however, transactions within large cities may increase.

"The real estate market as a whole will see prices dropping this year, but I don't think the market will collapse like some people have predicted. I believe transactions across many areas will actually pick up, especially in major cities where people continue to flock to, which will result in increased rental prices. The rent hikes will ultimately lead to a demand for properties to remain solid."

Before 1998, housing in urban China was rationed to residents based on occupational rank, seniority, and family size.

According to Bloomberg, since the welfare housing system was ended that year, China's nationwide home prices have surged at least 140 percent. Prices in first-tier cities in particular, increased two to three folds.

Last year, the Chinese government implemented purchase restrictions in major cities as well as credit tightening in an effort to rein in soaring housing prices.

According to the National Bureau of Statistics, In January, 48 cities out of a statistical pool of 70 major cities saw declines in new home prices from December of last year, while new home prices in 22 cities remained unchanged.

However, Professor Li Daokui, who is also an academic advisor to China's central bank, suggests that there might need a long-term solution for cooling the market.

"If we can call the introduction of purchase restrictions an 'anti-fever drug' of the real estate market, the development of government subsidized affordable homes can serve as an 'antidote' to the current problems of market."

Real estate developer Mu Linru, who is also a CPPCC member, also believes that to resolve the existing problems within China's property market, more needs to be done other than just curbing home prices.

"Real estate prices are a reflection of supply and demand within the market; they represent a contract and agreement between consumers and producers. But the housing problem is about providing people with somewhere to live, which requires joint effort from both the government and real estate developers. I think suppressing prices alone is not in accordance with the principles of a market economy."

China plans to build 36 million affordable homes during the coming five years, including 10 million in 2011 and 10 million in 2012.

As Premier Wen Jiabao has pledged to continue regulation of the real estate market in order to bring property prices down to a reasonable level, national advisors agree that the problems within the real estate market did not come about overnight, and thus it is unrealistic to expect the problems to be resolved soon.

For CRI, this is Ding Lulu.