Hainan Curbs Speculation in over-Heated Property Market

Lately, soaring housing price in Hainan has caused grave concerns. Some worry Hainan might be the next Dubai. What is going on in the local real estate market? Yingying has the details.

Reporter:

The Chinese central government announced a plan last month to build Hainan into a top international tourist destination by 2020.

This has injected energy into the property sector on the island. Many real estate developers and home buyers have flocked to the island, significantly driving up local property prices.

In coastal city Sanya, the average housing price reached some 20-thousand yuan, or nearly three-thousand U.S. dollars per square meter earlier this month. The figure is almost twice that of last November.

The rocketing prices could be profitable for property developers, but it's a bitter development for local residents.

According to figures from the National Bureau of Statistics, the average income of Hainan resident was some 11.6-thousand yuan, or 1.7-thousand U.S. dollars in the first three quarters of last year. A local resident cannot afford to buy even one square meter of housing with a whole year's income.

Chi Fulin, the executive director of the China Reform and Development Research Institute notes the current situation of the over-heated property sector in Hainan.

"At present, there is some bubble within the property market in Hainan, because lots of hot money has flown into the province and driven up the housing prices. The bubble could disappear. But we should be cautious that if the bubble becomes a middle and long term one, it would be harmful to the initial stage of building Hainan into a world class travel destination."

In Hainan, over eighty percent of property purchases are speculative in nature, leaving many units unoccupied.

Li Honghai is Director of Sanya Bureau of Housing and Urban-Rural Construction.

"Property developers should not stock up on housing supply or sell housing which is under construction. All kinds of nominal membership fees or down payment are also banned. We will place violators, who we have warned but continue doing so, onto a blacklist. Then they would be ineligible to do property development business in Sanya."

The Hainan provincial government says it has temporarily suspended land transfer and new property development projects to curb speculation. It also plans to provide more than 100-thousand units of affordable housing for low and middle income families in the province.

Ying Ying, CRI news.