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Home >> Business
UPDATED: 08:19, May 10, 2006
Policymakers try to figure out hot property market
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As China's central policymakers continue to their year-long effort to rein in the wild property market, a spate of controversies over conflicting market figures has led to two inevitable questions: Is macro control the right choice? And how effective is it?

The first question arises from controversies over the vacancy rate, a key measurement of the health of the market.

Yi Xianrong from the China Academy of Social Sciences and his supporters hold the vacancy rate in China's commodity housing market is at a highly dangerous level of 26 percent. They have warned the economy is at risk and called for stern measures to bring down the vacancy rate.

However, other experts led by Dong Fan, a professor with the Beijing Normal University, insist the vacancy rate is less than one percent, and that rising house prices are a correct reflection of insufficient supply.

The vacancy rate is calculated by the floor space of all houses available for sale or let divided by all the houses on the market. There is no dispute on the definition of vacancy rate in western economies.

But in China, most experts agree that a new definition is needed. It is recognized that the process of massive urbanization has long ended in the West, but has just begun in China.

China is building more houses every year than the whole of the developed world.

Experts, however, are at loggerheads on what the new calculation should be.

The results from different methods vary from 30 percent to less than one percent -- and the conclusions vary wildly.

Figures from the National Bureau of Statistics (NBS) in March showed that the prices of commodity houses in Beijing rose by 8.4 percent and 7.3 percent year on year in January and February, respectively.

Figures released by the Beijing municipal committee of construction and other city authorities, however, indicated that housing prices soared by 17.3 percent in the first two months of 2006.

The NBS also said Beijing's house prices rose by 6.8 percent year on year in 2005, the figure from the Beijing municipal authorities was 17.3 percent.

Who is to be believed?

Wang Xiaoqing, an official with the NBS, said the NBS figures must be believed because the NBS is the only legitimate authority to release figures. He said the NBS had always used methods that had been tested and followed international norms.

Luo Yuanpin, an official who in charge of Beijing housing statistics, admitted they used a different method from the NBS, but it reflected the market more accurately.

While the NBS based its figures on polls, Luo said Beijing authorities used a databank that recorded every purchase.

Yang Shen, the just-retired president of the China Real Estate Association, said it was high time to sort out the confusing and inaccurate data or it would cause greater problems.

Yang, also a former deputy minister of construction, said the chaos was inherited from the days of the planned economy.

The property industry was still using methods from the time of planned economy while a new statistical system was urgently needed to fit the market economy, he said.

The government is now taking notice of the statistics mess.

The Ministry of Construction has issued an instruction to authorities in 40 major cities to conduct a thorough survey of empty homes before policymakers take any further measures.

Hou Ximin, a senior official with the ministry, said it would work with other authorities to improve the evaluation of markets and improvement to communicating market information to the public.

In Beijing, the authorities have set up a website that provides detailed information on the sale of each project. Type in the name of any building and the website tells you which apartments are sold and which are still available.

The authorities believe this will deter unethical developers from fabricating non-existent deals to shore up prices and incite panic buying.

Source: Xinhua

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