House prices will continue to rise all over China because of a lack
of actual investment in property but a rising purchase potential, the central
bank predicted Tuesday.
In a recent report, the People's Bank of China has warned that a slowdown in
property investment is likely to widen the gap between housing supply and
demand, therefore prices will rise continuously.
The central bank suggests the government should be extremely concerned about
the trend in the real estate market.
Researchers say part of the reason for the rocketing prices are the
government's efforts to control its red-hot economy.
Lin Yueqin, a researcher with the Chinese Academy of Social Sciences, said
that in recent years the real estate industry has been the engine driving
domestic economic growth, as well as an exorbitant profit-making sector.
"But as loan frequency, fixed asset investment and the industrial economy
have all been slowed down, supply will not meet the demand of the buyers," said
Lin. "Thus prices will go up."
A survey on real estate markets in 35 major cities has prompted the National
Development and Reform Commission to conclude that China's house sale prices in
the second quarter this year grew by 10.4 per cent year on year.
The price level was 2.3 per cent higher than the first quarter this year, and
the land price in the second quarter rose 11.5 per cent year on year.
Strong purchasing potential has spurred on prices which have been steadily
increasing for four years.
The 35-year-old Fan Dingyu, a restaurant boss in mountainous Tongjiang
County, Sichuan Province, is now considering buying a 100-square-metre apartment
in the provincial capital Chengdu.
Fan, the mother of a primary school child, said the house will cost her about
280,000 yuan (US$33,700) -- equal to the amount an average worker would earn in
30 years.
"My husband and I bought the house for two reasons: one for investment, the
other for my child's education," said Fan, who plans to send her to school in
Chengdu next year.
Fan is not alone. The Sichuan Provincial Construction Department said about
20 per cent of home buyers in Chengdu are not local residents.
In the second quarter of this year, housing prices in the Chinese economic
hub of Shanghai have reached a year-on-year increase of 21.4 per cent, the
fastest growth among 35 major cities.
Shanghai has taken the lead nationally, followed by Ningbo, Tianjin, Nanjing
and Chongqing.
Shanghai's increase has already topped those of other cities during the first
quarter of this year, achieving a nearly 30 per cent year-on-year increase.
"Housing prices nationwide have risen quickly," the National Development and
Reform Commission said.
Commercial house prices topped 5,118 yuan (US$617) per square metre last
year, about 24.2 per cent or 1,000 yuan up from the previous year.
Yang Shen, chairman of the China Real Estate Association, said tougher
measures should be put in place to ward off risks in China's bullish real estate
sector despite housing demands in the country remaining
strong.
