The real costs of house-building should be checked to control housing prices, says a signed article in China Youth Daily.

 

Hurun Report released its 2006 China Property Rich List on October 16. The total fortune of the 50 magnates on the list reaches 201 billion yuan (US$25.4 billion), and it is said that the list's doorsill is 1.5 billion yuan (US$190 million) - highest among the industrial rich lists, says the article.

 

This list also shows that the wealth levels of the property rich are closely related to local housing price levels. Among the 50 on the list, 14 have their enterprise headquarters in Shanghai, 10 in Guangdong Province and nine in Beijing. These generally correspond with the three areas' housing price levels.

 

Obviously the cities with high housing prices are bringing up property tycoons. In Hurun's earlier 2006 China Rich List, six of the country's 10 richest people are property tycoons and two more do some business in this trade.

 

All this shows that these property rich are brought up by the exorbitant profits in this business.

 

The government has taken various measures to control housing prices in recent years, but the results are not satisfactory. A major reason is that all these efforts have not touched the profit margin of the real estate industry, and thus the basis of the exorbitant profits has not been affected, according to the article.

 

This basis is the housing costs.

 

Not long ago, some consumers called for the disclosure of housing costs, but related parties all held an ambiguous attitude. Property developers said these are business secrets. Some economists said disclosure would go against market rules. Some local governments said it was not the right time.

 

But without the reference of costs, how can government departments control prices effectively?

 

The property industry has been denying quick profits as consumers complain. If the government does not investigate the costs, there will be no result of the debate. The developers are still enjoying exorbitant profits.

 

Many cannot afford to buy their own houses, though houses are a person's basic need. The existence of exorbitant profits is a harm done to public interests, the article concludes.

 

(China Daily October 24, 2006)