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China to extend joint property ownership pilot scheme to cool prices
March 6, 2014 / 5:50 AM / 4 years ago

China to extend joint property ownership pilot scheme to cool prices

BEIJING, March 6 (Reuters) - China will extend a pilot project on joint home ownership between local governments and private buyers into some big cities this year, the vice housing minister said on Thursday, as authorities look to subdue a property market in danger of overheating.

The minister, Qi Ji, told a forum on the sidelines of China’s annual parliament session that under the plan, local governments would sell land to developers at lower prices and retain part ownership in homes built on the land. The homes would have to be sold at below market rates.

House prices in China have surged in the past year, prompting worries of a price bubble and raising concern among officials over social problems as millions of Chinese find themselves priced out of the market.

Local governments, under pressure from central authorities to cool price rises, have embarked on a series of measures including making more land available, clamping down on second-home buying and restricting mortgages.

The measures have had some effect, with official figures in January showing that home price growth eased for the first time in 14 months, though they still rose at close to 10 percent.

“We are preparing to push forward the joint home ownership pilot scheme in some key cities,” Qi said, without giving details of the target cities.

“The joint ownership homes could help ease the current shortages in homes in some cities, especially easing housing demand from the least advantaged group, young people,” Qi said.

The scheme will mainly target new graduates and local residents working in cities for several years without owning homes, Qi added.

Home buyers can only sell such homes back to the government after a certain period or they can buyback the government’s ownership share.

Beijing city began such a scheme late last year and has promised to supply 50,000 such homes this year.

Qi indicated that China’s property market has been generally stable so far this year, while efforts to rein in the market will continue. He said the government will cut the land supply in cities with high housing inventories and increase home supply in cities where prices are rising fastest.

“We will use necessary economic measures to support local housing demand and reduce inventories in cities with high inventories,” Qi said, without elaborating.

Analysts expect house price rises to moderate further this year as the government measures continue and as credit growth slows, though persistent demand from buyers and the need to sell land by local governments to boost their coffers are likely to keep prices buoyant. (Reporting by Xiaoyi Shao and Jonathan Standing; Editing by Shri Navaratnam)

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