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China's proportion of land value in housing price is far below UK and US
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16:08, June 24, 2009

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Recently, some experts noted that because of the "red line" to reserve 1.8 billion mu of arable land, China's land supply is somewhat short of demand and the land price stays relatively high, thus affecting the housing price.

This assertion makes no sense and the proportion of land value in housing price in China is far below the UK and the US, said Lu Xinshe, vice minister of the Ministry for Land and Resources (MLR) and deputy state land inspector-general.

Investigations by the MLR showed that at present, China's average proportion of land value in housing price is 23.2 percent. The assertion that the housing prices are soaring because of the "red line" to reserve 1.8 billion mu of arable land is groundless.

No matter how scarce China's land resources are the land to develop residential housing to satisfy residents' normal demand can be assured.

Lu said that land value is just one of the important factors affecting the housing price, but not a decisive one. Supply and demand is the key or fundamental factor that plays a decisive role in determining the housing price.

A survey on 620 real estate development projects in eastern, central and western China indicates that, in China, land value accounts for 15 to 30 percent of the housing price, an average of 23.2 percent.

However, this ratio is 28 percent in the US, 25 to 38 percent in the UK, 50 to 65 percent in South Korea, and even 60 to 75 percent in Japan. The proportion of land value in housing price in China is far below neighboring countries.

By People's Daily Online



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