China Business

Sep 20, 2005

China real estate market to recover soon

SHENYANG - The real estate market in most parts of China remains stalled at present, but the situation will not last for long.

According to Wang Guogang, deputy director of the Financial Research Center of the Chinese Academy of Social Sciences, China suffers from great housing shortages and the property market will not stop developing in the medium to long term.

China is in the process of accelerated urbanization. If urban population growth is conservatively estimated at 0.8 percentage points annually, the total urban population would hit more than 1.4 billion by 2025, and the proportion of urban residents is likely to

increase from 40% to more than 56%. Thus, there would be 260 million families requiring some 26 billion square meters of living area. However, the living area available is less than 9 billion square meters by the end of 2003.

Moreover, China will have to resettle or rebuild about 100 million square meters of dilapidated housing in urban areas in the coming years, involving a number of existing houses. This will surely expand housing shortages and sustain the property market.

Zhao Luxing, an official from the Ministry of Construction, said that although China's macroeconomic cooling measures have had a positive impact on the real estate market and it is now in a state of stagnation, this situation would not last long.

He also cleared up the misunderstanding that the state's macroeconomic control policies are aimed at lowering housing prices per se, saying that, rather, the purpose of the control measures is to rein in the excessive rate of growth.

(Asia Pulse/XIC)

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