A recent conference on living environment has been making headlines recently after it allegedly found the Chinese enjoy housing conditions comparable to the world's "middle-and upper-levels," with a per capita dwelling space of 23.7 square meters in cities and 27.2 square meters in rural areas.

This sounds too good to be true, but if so, it would be perfect evidence of the merits of our commercialized housing system.

A couple of years ago, China stopped allotting State sector employees free housing in favor of a commercialized system backed by mortgage loans which mirrors "international practice."

But a probe into this rosy picture may discover a few thorny issues.

Local media reports show Beijing family debt ratios have averaged at 115:100, a level said to be above that in the United States. The ratio is also high in other major cities, mainly because of housing mortgages.

There is no consensus so far among government officials and economists on whether the housing sector is generating a bubble. But the high housing price is undoubtedly a heavy burden on Chinese citizens.

Some scholars found a typical 80-square-metre apartment in Shanghai costs 27.5 times the local disposable income per capita per year, compared to a reported 11 times in Japan where land is extremely scarce.

No doubt, the mortgage is a great invention and helps the Chinese get homes despite abnormally high housing prices and income way below international standards. It has become one of the most profitable businesses in banking services and stimulated the country's economic boom that has caught the world's eye.

But the price is dear. A couple of years ago when our government and media borrowed the Western methodology to encourage private consumption and even overdraft debt, few thought carefully about the pressure of borrowing a home mortgage worth 20 years of income.

Who factored in that an average family still has to take care of education, healthcare and many other aspects not covered effectively by our incomplete social security system? Few if any, it would appear.

(China Daily November 3, 2004)