Move to stop padding of property prices

ON FEB 18, the Ministry of Housing and Urban-Rural Development began soliciting public opinions on a draft regulation that requires realty developers to sell newly-constructed buildings according to their exclusive usable floor area. Pan Helin, a postdoctoral scholar at the Chinese Academy of Fiscal Sciences, comments:

If you buy an apartment of 100 square meters, it does not mean that is the exact size of the apartment, as that figure will also contain common areas, such as part of the corridor and the public stairs. The area that exclusively belongs to the buyer, or the so-called "usable floor area", will be about 70 square meters.

That has long been a cause for complaint. The draft regulation, if passed, will not eliminate these public areas. Unless you reside in a private villa, public stairs and corridors are required for access to the apartments, and the cost of these public areas must be shared by every occupier of the building.

However, the draft regulation will hopefully put an end to the practice of developers making the public pool areas account for a high percentage of an apartment's floor area so they can make more profit. In 2017, the floor area of an apartment in Nanjing, East China's Jiangsu province, reportedly had shared areas that accounted for 58 percent of the total, which is ridiculous.

The new draft regulation will hopefully put an end to this. Of course, when developers have to sell their properties according to their usable floor area only, the price per square meter will rise, at least on paper, but that won't bring additional burden to consumers as the price they are paying will be the same, and at least they will know they are paying for what they own.

So the new draft regulation will hopefully regulate the standards of the realty market. We hope the authorities will make other standards, too, so as to further regulate the housing market.