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 Thursday, January 27 2022 @ 11:42 pm UTC

Real Estate Control of China Shows Good Results

General NewsThe trend of overgrowth of investment in China's real estate sectors has been curbed, the overheated demand for houses is cooling down, and the supply and demand relations on real estate market are improving, creating conditions for a stable housing market, with a series of macro control policies promulgated and implemented in 2005.

China's macro control policy over real estate sector is paying off. All in all, China's real estate market is developing toward the expected target. As China has tightened the gate to land-use examination and approval and credit extension, growth of investment in real estate sector in the country has kept slipping.

China achieved an investment of 1.5759 trillion yuan in real estate development in 2005, up 19.8% year on year, according to statistics provided by the National Bureau of Statistics. As of May, the growth of investment in real estate development has for eight consecutive years been lower than that of fixed assets investment in urban area in China.

Dynamic monitoring of the Ministry of Land and Resources shows that land supply for real estate developers in 2005 decreased by 20.2% as compared with in 2004. However, the proportion of land supplied to construction of economy houses increased by 0.7 percentage points.

Statistics of the People's Bank of China (PBC) show that by the end of 2005, the outstanding commercial loans to real estate development totaled 2.77 trillion yuan, up 16.1% year on year, 12.6 percentage points lower than at the end of2004. Meanwhile, land area purchased by real estate developers decreased by 4% in 2005 while the area of land developed increased by 5.2%.

Conducted by the National Bureau of Statistics show that since the latter half of 2005, prices of various real estates have fluctuated slightly, and the growth has slowed down, with house prices in some cities dropping steadily, surveys on real estate prices in 70 large and medium-sized cities.

3.6 percentage points lower than in the same period of 2004, that is what sales prices of newly constructed commodity houses in the 70 cities grew 7.5% year on year in the fourth quarter of 2005.

Sales prices of economy, ordinary and high-grade houses grew 3.9%, 6.8% and 9.3% respectively, as posted in a breakdown.

Analyst said sales price of secondhand houses grew 5.8% in the fourth quarter, 12.5 percentage points lower year on year; that of non-residential commodity houses grew 4.8%, 2.6 percentage points lower; leasing price of houses grew 1.6%, 0.4 percentage points lower.

Speculative purchase of houses has been put under control effectively, Thanks to adjustment of housing taxation policy and loan rate and adoption of a series of macro control measures. Thanks to adjustment of housing taxation policy and loan rate and adoption of a series of macro control measures.

China's real estate market is expected to maintain a stable development trend in 2006, but may still face some problems: the structural problem is yet to be resolved fundamentally; house prices in some places are still rising rapidly and the pressure of speculative investment demand still remains; real estate market supervision system in some cities needs to be improved and market order is yet to be standardized; some new uncertain factors may pose threat to healthy and orderly development of real estate market. Several problems need to be paid attention to under macro control policy.

By: Dijon Wainwright

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