In a piece at opinion site
Sike.com, Lu Ming, professor of economics at Shanghai Jiaotong University, attributes the high housing prices in China’s first-tier cities to the problematic distribution of land resources. While cities along the heavily populated east coast continue to tighten their land supply, Lu said, supply in the country’s central and western regions has been rising despite the population outflow.
The rich land supply has led to the emergence of a large number of industrial parks and new towns in central and west China, which even on conservative estimates can house 600 million people, Lu said. At a national scale, the country has no housing shortage, but the vital problem is the geographical mismatch between supply and demand, he said.
The easy way to control housing prices is to increase land supply and thus housing supply, Lu said, adding that this will first of all require the government to remove the controls on the use of land for construction. Lu believes big cities are a long way from running out of land and still have plenty of space to expand, noting that Tokyo covers an area twice the current size of Shanghai. Even if land supply is unchanged, Lu argues, there are still ways to increase housing supply, such as by turning commercial zones into residential ones and increasing the floor space of residential buildings, especially in urban centers.
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