Deputy decries housing prices

• Source: Global Times
• [03:00 March 08 2010]
• Comments

By Li Qian

A Beijing official said that the cost of real estate properties in the city is only 20 percent of their market price. Du Deyin, head of the Beijing Municipal People's Congress, made the comments on the sidelines of the National People's Congress, during a group discussion Saturday on Premier Wen's government report.

"I had asked Sui Zhenjiang [director of the Beijing Municipal Commission of Construction], and was told that the cost of building one square meter of the properties is no more than 3,000 yuan ($439.17), including the cement, iron rods and labor cost," said Du.

Zhang Gong, head of the Municipal Commission of Development and Reform, said property prices in Beijing currently average at 17,000 yuan ($2,488.65) per square meter, hinting that the construction cost accounts for one fifth of the home price.

A large part of property prices is due to the cost of the land that developers pay the government. Du said that residents would enjoy lower home prices if the government directly provides the land to developers instead of selling them.

Real estate companies must buy land from the government before building on them. Beijing has advocated land auctions, in which the highest bidders win the land. But many residents say this system increased property prices, especially in 2009 when the record for land prices was often broken in Beijing's auction houses.

At an earlier meeting, CPPCC member Zhang Jieting forecast that Beijing property prices will more than double to reach 40,000 yuan per square meter within two years, and called on potential home buyers to act early. But his prediction was refuted by the Minister of Construction, Jiang Weixin.