The deep-seated reasons for the whopping #house #price in #China are the overdependence of local #government on #realestate #income and lack of effective supply of public affordable housing.
1. #government takes 60-70% of developers' sales proceeds annually by land sales and taxes. Land transfer fees directly contribute to 90% of local government fund revenue,while #taxes and fees related to #realestates (especially land #VAT) account for 20%+ of local tax revenue.
2.This will push up #land prices and result in undersupply of #land. This leads to long-term #supply-#demand imbalance, since cities with more #population inflow see more serious undersupply and higher land prices.
3.#China’s public house #market is ineffective. Improper #government interference will not only push up house prices and compromise both the quantity and the quality of affordable houses, but also render average-income families less confident in the #realestate market.
4. Despite #land undersupply, high land prices and mounting #taxes, the #financing of developers is highly regulated, so they will bear higher financing #costs, which will again elevate the housing price.
By Liang Hong:
mp.weixin.qq.com/s?__biz=MjM5Nj…
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