China Creates Housing and Construction Ministry

The National People’s Congress proposed creating a new Ministry of Housing and Construction as part of a ministry reshuffle. It would be the first ministry that specifically looks at housing needs.

The new ministry would encompass commercial real estate and government subsidized housing. Previously, the construction ministry focused on real estate regulation, overlooking housing needs of middle- to low-income people. The new ministry would replace the current construction ministry whose supervision of public transportation would be shifted to a new Ministry of Transport, Caijing reported.

The government recently shifted its policies to boost public housing, allocating 6.8 billion yuan for building low-rent flats in 2008 — a 33 percent increase in spending compared to last year.

Industry insiders, however, have expressed some concerns about the new ministry’s effectiveness. For example, they say government regulators will have to compete against the interests of other ministries — including finance, tax and land agencies — which could reduce the effectiveness of any policies aimed at controlling real estate prices. Untangling such a complex web of interests could pose a major challenge for the new housing ministry’s leaders.

China’s housing prices re some of the highest globally, compared to earnings, China Daily found.

In New York, the average price for per sq m is $2,059, and figures from the US Department of Commerce show the American average annual income was $36,000 or $3,000 per month.

And in Tokyo, residents pay 2.1 million yuan for an 80-square-meter home and one parking spot, or $3,657 for per sq m, while the average annual income there is $34,510, or $2,875 per month.

In Shanghai, the average income in the first half of 2007 was 12,278 yuan ($1,727), and yearly income was expected to exceed 26,000 yuan by year end, for a monthly income of 2,167 yuan ($304.84).

Meanwhile, housing prices went up 11.3 percent in January, according to Xinhau, despite a slump in the Beijing real estate market reported by Shanghai Daily.

March 13, 2008 4:11 PM
Categories: Economy, Politics