China on alert for property market overheating

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Last updated at: (Beijing Time) Wednesday, January 14, 2004

China on alert for property market overheating

China's real estate market developed in a sound way in 2003, though the country must be on high alert for symptoms of overheating, Chinese Minister of Construction Wang Guangtao said Tuesday.

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China's real estate market developed in a sound way in 2003, though the country must be on high alert for symptoms of overheating, Chinese Minister of Construction Wang Guangtao said Tuesday.

Wang said at the annual national construction conference opened in Beijing that these symptoms have been seen in some Chinese cities, such as in an improper proportion of economic and luxurious houses, an overly fast increase of housing investment and illegal behaviors in housing development and purchase.

From 1998 to 2002, the average growth rate of investment in China's real estate industry was around 20 percent, but during the first 11 months of 2003, China's housing investment totaled 828.5 billion yuan (about 100 billion US dollars), surging 32.5 percent over the same period of 2002.

Chinese economists held that such increasing housing investment marks that China's housing industry has entered a new phase of fast growth, which will be helpful to push forward China's economy.

But Wang said the improper proportion of economic and luxurious houses still exists in the fast expanding housing industry. In some cities, the number of houses for middle and low income families still can not meet the market demand, while the luxurious houses remain unsold.

During the first 11 months of last year, 22 Chinese provincial areas saw an increasing number of unsold houses, and the proportion in the western areas is even higher than that of the east and central areas, said Wang.

On the surging housing investment and the growing housing prices in some Chinese cities, Wang said the unplanned increase of houses in these cities will surely result in superfluous houses on the market, and thus the increase of unsold houses.

In 2003, China's average housing price climbed 4.9 percent, but40 of China's major cities reported an increase of nine percent in housing prices, and some cities even reported a price increase of 20 percent.

Wang said that in the first half of 2004, China will try to promote a housing information system and an alarm system in 35 major Chinese cities, so as to have better supervision over the market.

In 2003, China also saw increasing overdue payment in the construction field. Wang said in 2004, China will further improve its housing credit system, and launch national inspections so as to reveal those housing companies with low credibility.

The housing market should develop in a rational way in 2004, said Wang, noting that the bud of overheating must be controlled so as to maintain a sustained healthy development in the future.

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