Gov't eyes continual control of land use
By Fu Jing (China Daily)
Updated: 2006-02-06 06:15

Wang said that housing supply in the country is out of balance, with insufficient lower-priced, smaller houses for low-income families.

China's real estate market has experienced a major growth in some regions since 2002 with house prices increasing at around 15 per cent annually on average.

In August 2004, the central government started to tighten land and loan supply to curb the trend.

"Measures will continue this year as the development is constrained by shortage of land supply," said Wang.

Wang said the real estate sector in 2005 saw a year-on-year increase of 21 per cent.

Statistics from the National Development and Reform Commission indicated that real estate prices nationwide posted a 6.5 per cent year-on-year increase on average during the last quarter in 2005.

The increase rate has slowed down compared with 10.1 per cent in the first half and 12.5 per cent in the first quarter of the year.

In spite of the slowdown in price increases, ordinary households in China need to work for years to satisfy their housing needs.

According to current income standards, the World Bank believes that the average household, worldwide, can earn enough money to buy an apartment in five years. But in China, that figure is 12 years for an average urban family.

"The government should take measures to lower house prices," said Xiao Zhuoji, a renowned economist with Peking University.

Xiao said the government should take measures to cap land transfer fees and the profits of real estate developers. "The fees and high profits have pushed real estate running up," said Xiao.

He said profit rate in China's real estate sector averaged 40 per cent but rational rate is only about 5 per cent.