Sunday, January 16, 2011

China Promises Affordable Housing But Will Local Governments Implement it?

Misleading title. Neither the government's actions, nor the article have anything to do with deflating the bubble, just ameliorating the effects of it.

China Takes Big Steps in Affordable Housing to Bring down Real Estate Fever
However, both policy makers and market observers have pointed out that the good intentions of the central government's regulations and construction plans could fade if local governments, which rely largely on land transfers for their revenues, fail to have them properly implemented.


"The central government is determined to speed up affordable housing construction, but it depends on local governments to carry out the plans," he said.

Local governments could be reluctant to implement them, as they are asked to both transfer the land at a low price and help finance these projects, which will definitely reduce their fiscal revenues, he explained.

With 10 million units planned for 2011, the government will continue to be developing property, directly into the teeth of the bubble. Since they feel social stability depends upon it, expect them to remain in the game (become the game) when the rest of the market crashes.

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