BEIJING - China's
booming property market, which had cooled off
after the central government adopted a package of
policies to rein in runaway housing prices a year
ago, has begun to show signs of warming up since
March of this year.
Data from the National
Bureau of Statistics showed that the property
market climate index, which fell to below 102 in
April 2005 and had continued in a downward trend
for eight successive
months, hit 122.9 points in
the first quarter of this year, a rise of 1.9%
from the last three months of 2005.
China's major cities, including Beijing, Shanghai, Guangzhou,
Shenzhen and Nanjing, have all reported steep
housing price hikes since March.
In
Shanghai, China's largest industrial city with a
population of 17 million, both the trading volume
of houses and their selling prices started to
climb in March following an eight-month downturn.
The trading volume reached 1.8 million square
meters in March compared with 820,000 square
meters in February, a rise of 119%.
The
price of commercial houses surged to 9,457 yuan
(US$1,181) per square meter at the end of March,
compared with 7,558 yuan per square meter in early
March. Prospective buyers even have to queue for
tickets to enter a bid for a new apartment in an
unfinished block.
The same thing has
happened in Beijing, as potential buyers in the
Chinese capital can now hardly find a commercial
apartment priced at less than 6,000 yuan per
square meter within the city's Fourth Ring Road.
Meanwhile, housing prices in Guangzhou, the
capital of Guangdong province in
south China, increased by 14% in the January-March
period of this year, with average price reaching
7,483 yuan per square meter. Industry insiders
held different views on whether these warming-up
signs signal an overall recovery of the housing
market, and whether the housing boom can last for
a long time.
Yin Bocheng, a professor with
the Real Estate Research Center of Shanghai-based
Fudan University, termed the phenomenon as
"selective recovery," as a majority of the house
trading focused on apartments with smaller space
and on property projects with a relatively low
price.
Zhang Yu, an analyst with the
Guotai Yun'an Securities, attributed the revival
of the housing market to the appreciation of the
Chinese currency, or yuan, whose value against the
US dollar has risen more than 3% since China's
exchange rate was reformed last July, and the
tough challenge faced by China in exports due to
trade tensions with major trading partners. This
means that China has had to encourage domestic
consumption to maintain high economic growth, and
the real estate industry is one of the pillars of
the domestic economy.
Starting this year,
Chinese banks have relaxed controls on loans for
housing purchases. The National Development and
Reform Commission (NDRC), China's pricing
watchdog, has also changed its macroeconomic
control tone for the property sector, from one of
"restraining" to one of "encouraging citizens to
purchase houses at an appropriate time and at [an]
appropriate price" in March.
Yin Zhongli,
a real estate expert with the Chinese Academy of
Social Sciences, believes the policy shift is
connected with the government's worry that a
downturn in the property market could produce a
negative impact on the banking and construction
sectors. Official statistics said bad housing
loans hit 1.55 billion yuan last year, up from 558
million yuan in 2004. Yin also warned of the risks
of a housing "bubble" as a result of the
"short-term prosperity" of the housing market
after a slack season.
The People's Bank of
China, the country's central bank, said in a
report that 143 million square meters of new
commercial houses were unoccupied across China by
the end of last December, a 15.7% rise from the
same period in 2004. The National Bureau of
Statistics also said that in 2005, 170 million
square meters of land, or over half of the total
land purchased for building houses, were not
developed.
Meanwhile, the contradiction
between the skyrocketing housing prices and the
relatively low purchasing power of Chinese
citizens is far from being resolved by the
government. A report on China's property market by
the Financial Research Center of the Beijing
Normal University said that average urban
household income stood at 15,000 yuan and 17,000
yuan in 2005.
This indicates that 70% of
urban households cannot afford a new apartment at
current housing prices. The Chinese government is
currently treading on sensitive ground. On the one
hand, it hopes the real estate industry can help
stimulate weak domestic consumption, and on the
other hand, it wants to maintain a "healthy and
orderly" development of the property market.
