It's all about owning a house, stupid!

By Zhang Yu (China Daily)
Updated: 2007-04-16 10:40

Most of the people who believe in Yu's idea do so because it can offer a house at a lower price. But there are those for whom something more is at stake. As one of Yu's active supporters Wang Sheng said, at least 20 people are with him for more than the low property prices. "The charming thing about the concept is that we can discuss together the layouts of the houses where we will live for the rest of our lives. It's a collective, communist way of doing things and very ideal."

But good ideas don't necessarily have a smooth sailing. Yu, for one thing, is frustrated because he can't buy a plot in Beijing for a decent price. He first made an attempt to buy one in April 2005, and since then has failed on many occasion. Yu and organizers like him in other cities conceded that they are too weak to compete financially with big developers.

"Acquiring land use rights is the greatest obstacle to collective house building in China," said Zhao Zhi, who initiated collective house building in Wenzhou, a relatively well-off city in East China's Zhejiang Province.

Wenzhou is famous as the birthplace of many real estate speculators. But in November, it also became the first city in the country to put the idea of collective house building into practice. A group of 260 people bought a plot for 105 million yuan. It was the first time a collective house-building group had acquired a plot, making Yu feel confident once again in succeeding in his mission, and prompting him to say at the fair: "We're sure of buying a plot in the future."

Residents of Zhengzhou, Central China's Henan Province, discuss the possibilities of collective house building. [China Daily]

Yu has a wonderful idea in his Lancheng plan, a member of his team said. "He wants the poor to enjoy the same rights as the rich when it comes to buying a house," he said.

But many experts don't seem to agree with Yu's associate. Many of them have said that collective house building is a temporary phenomenon. "It was born out of intense social contradictions that denied many common people from having a home," said a senior real estate analyst who didn't want to be named.

"The collective house building concept will fade with the gradual introduction of low-cost homes built on government subsidy." During the previous years, the government didn't make much effort to build houses for low-income families, leaving a huge vacuum in the residential sector. But it has vowed this year to make a concerted effort in that field. That can change the equation to a large extent both for the big developers and the collective house builders.

Real estate companies are by nature market oriented and they can't take up the government's role to fill up the vacuum created by lack of enough houses for the lower-income group. So the government has to solve that problem," the expert said.

Shanghai-based real estate expert Yin Kanhua, on the other hand, doubted whether the collective house building idea would really help the poor and the lower middle class.

"Not every individual can suddenly become a real estate developer. One needs a lot of professionalism to do so," Yin said. "Collective house builders can only form a loosely-structured group, which people cannot readily rely on."

Many experts regard collective house building as a backward step in these days of market economy. "It goes against the rules of market economy," said professor Yi Xianrong, an outspoken expert on real estate. Collective home building can't solve China's housing problem. "That can only be tackled by perfecting China's real estate industry and by building standard homes."

The two sides for and against Yu have reason not to agree, but for the time being many people who believe in his idea seem convinced to succeed in their endeavour and own a house of their choice.

(China Daily 04/16/2007 page5)


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