The government will continue to regulate land supply for real
estate development this year but has promised to allocate more land
parcels for economical housing for low-income families, according
to an official from the Ministry
of Land and Resources.
Yuan Xiaosu, vice minister of land and resources, urged local
governments to stop selling land to investors at low prices, in a
bid to protect the country's limited land resources, according to a
Xinhua report on February 4.
He said the government would continuously protect primary
farmland and prevent misuse and illegal occupation of farmland so
as to ensure the country's grain security.
But Yuan said the government plans to supply more land to
construct low-cost housing in an effort to satisfy growing needs
and mitigate the effects of rising real estate prices.
"We are still facing the demanding task of regulating land
supply in 2006 to keep land and real estate prices stable," Yuan
said.
Wang
Guangtao, minister of construction, added that the
government has managed to control the overheated investment in the
country's real estate sector in 2005.
"More real estate development will use more arable land," Wang
said. "And that will cause some concern over grain safety," he
warned.
Through the urbanization and modernization of rural regions,
more people are planning to or have bought or built more spacious
homes.
Per capita living space in cities increased from 20 square
meters in 2000 to 25 square meters last year. The figure is 40 in
the US, 38 in Germany, and 30 in Japan and Singapore
respectively.
Wang said that housing supply in the country is unbalanced, with
insufficient lower-priced, smaller houses for low-income
families.
China's real estate market has been experiencing a major growth
in some regions since 2002 with house prices increasing at around
15 percent annually on average.
In August 2004, the central government started to tighten land
and loan supply to curb the trend.
"Measures will continue this year because development is
constrained by a land shortage," Wang said.
He said the real estate sector in 2005 saw a year-on-year
increase of 21 percent.
Statistics from the National Development and Reform Commission
(NDRC) indicated that real
estate prices nationwide posted a 6.5 percent year-on-year increase
on average in the last quarter of 2005.
This equates to slowed growth compared with 10.1 percent in the
first half, and 12.5 percent in the first quarter of the year.
In spite of the slowdown in price increases, ordinary households
in China need to work for years to satisfy their housing needs.
According to current income standards, the World Bank believes
that the average household, worldwide, can earn enough money to buy
an apartment in five years. But in China, that figure is 12 years
for the average urban family.
"The government should take measures to lower house prices,"
said Xiao Zhuoji, a renowned economist with Peking University.
Xiao said the government should take measures to cap land
transfer fees and the profits of real estate developers. "The fees
and high profits have pushed real estate prices way up," Xiao
said.
He said rates of profit in China's real estate sector averaged
40 percent.
(China Daily February 6, 2006)