Housing prices expected to drop by 10% in 2005
BEIJING - China's macro-control policy will continue exerting impact on China's real estate development market this year.
Housing price is forecast to drop by 10% in 2005, said Jia Hai, deputy directory of the Investment Department of the National Bureau of Statistics.
But the real estate industry will still face such problems as large-scale investment in development and fast increase of housing prices, Jia noted.
Jia said that the national performance index of property industry, a main indicator of China's real estate market, had dropped from 107.75 points in earlier 2004 to 104.78 points in the first 10 months.
The index is expected to rebound to about 105 points by the end of 2004. Potential demand for residential buildings will turn into effective demand.
For land supply, the country is estimated to have more than 400 million square meters of land that have not been put under development stage.
For funds supply, sources of funds will be comparatively sufficient this year, basically maintaining more than 30% higher growth than that of investment in development.
The country's investment in development of real estate is forecast to continue its strong pep of growth of about 23% in 2005, and average growth of sales price of marketable houses is expected to decline to about 10% as the country's national economy is developing at a fast pace, market environment is improving, and the basic conditions to support the sustainable development of real estate industry remain unchanged.
Jia has listed several problems facing the industry, including:
# Big numbers of real estate projects which are still under construction. China's construction area of marketable housing reached 1.2 billion square meters in the first ten months of 2004, and the planned investment in real estate development projects was as high as 4.2 trillion yuan (US$508 billion), rising 35.2% year on year.
# Irrational structure of investment. Proportion of luxury residential buildings, villa and high-grade apartment buildings is high in the total investment, while that of livable housing and low- and medium-grade residential buildings is low. China invested 646.1 billion yuan in marketable housing in the first ten months of 2004, of which livable housing only accounted for 5% as against 8.1% in the same period of the previous year.
# Rising of average selling price of housing. The average selling price was 2,758 yuan per square meter in January-October of 2004, rising 11.7% year on year, a record high growth since 1998.
(Asia Pulse/XIC)
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