China's average housing prices rose 14.4 percent last year,
despite the government taking a series of macro-control measures to
try to cool them down.
The National Bureau of Statistics (NBS) said
Friday that the growth rate of last year's housing prices was 10.6
percentage points higher than that of 2003, without providing an
exact price figure.
Residential housing prices rose 15.2 percent last year compared
with 2003, the bureau said.
Economist Niu Li of the State Information Center said house
prices are rising too much.
"There are bubbles existing in the sector, especially in the
luxury housing sector."
The bubbles could result in a series of economic problems, if
the government does not deal with them properly, he said.
Gu Yunchang, secretary-general of the China Real Estate
Association, agreed the housing sector in some of the country's
cities such as Shanghai, Hangzhou and Ningbo had bubbles.
But the bubbles were only partial and not very serious, he
said.
"They are controllable," he said.
Local governments in those cities have already taken measures to
deal with them.
Gu also admitted last year's housing price rise was the fastest
since 1998.
The higher housing prices were mainly caused by the strong
demand but limited supply, as well as the rising costs of building
materials, he said.
Aiming to cool the overheated investment, the government
tightened control of land supply and bank loans.
The government also raised the benchmark renminbi interest rate
by 0.27 of a percentage point last October, for the first time in
nine years, to discourage investment.
Due to those measures, housing supply became tight.
Figures from the NBS indicate that last year there were only 223
million square meters of land used by real estate companies to
develop housing, a drop of 11.4 percent from 2003.
However, last year construction was started on 604 million
square meters, an increase of 10.4 percent, and 425 million square
meters of housing were completed, an increase of 2.1 percent.
Housing sales reached 382 million square meters, an increase of
44.12 million square meters from 2003.
Niu said the macro-control measures, which aimed to curb the
price rise, have in fact fueled it.
Liao Yingmin, a researcher with the State Council's Development
Research Center, said China's housing price rise would become
stable this year, due to the improved supply situation.
The government has already decided to curb irrational demand,
but increase supply of medium and low-priced housing.
It has also decided to expand the old housing market this
year.
"This will not only help increase supply, but also improve the
supply structure," she said.
However, strong demand will continue to keep house prices at a
high level, she said.
China's housing industry has already become a new growth area
for the country's economic development.
(China Daily March 5, 2005)