Government and Policy

Policies tame home price rises

By Jin Zhu (China Daily)
Updated: 2011-04-18 07:31

Yet govt 'will face great pressure curbing the property market'

Beijing - Land prices in major Chinese cities rose slightly in the first quarter this year, but the rate of increase in residential land prices dropped as the government adopted measures to cool the runaway property market, the Ministry of Land and Resources said on Saturday on its website.

From January to March, the average land price in the country's major cities was 2,945 yuan ($451) per square meter, an 8.5-percent year-on-year increase, according to the latest figures from the land prices survey launched by the ministry and the China Land Surveying and Planning Institute.

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Residential land prices averaged 4,349 yuan per square meter in the first quarter, up 10.2 percent from a year ago and 2.4 percent from the pervious quarter, according to the survey.

Meanwhile, land prices for commercial buildings grew 11 percent year-on-year in the first quarter, while industrial land prices rose 5.5 percent, statistics from the survey showed.

But the regulator said the rise in residential land prices began to slow in the first quarter, which showed the country's strict measures to rein in property markets had begun to take effect.

Potential home buyers check displays at a real estate fair at the Shungeng International Convention and Exhibition Center in Jinan, Shandong province, on Friday, April 15, 2011. [Liang Zhijie / China Daily]

According to the survey, about 60 percent of the surveyed cities showed that the rate of increase in residential land prices slowed from the previous quarter. Nine cities saw a rise of more than 5 percent in residential land prices, in contrast to 23 cities that saw such an increase in the previous quarter, the survey showed.

The average land price in cities in East China was 5,931 yuan per square meter in the first quarter, far higher than the country's average land price, the survey showed.

The country has introduced a series of measures to curb rising property prices, including restricting residents in 35 major cities from buying second homes, higher down payments, property taxes in Chongqing and Shanghai, as well as policies that have raised developers' borrowing costs.

In Beijing, the average price for new commercial buildings was 19,679 yuan per square meter in March, a 26-percent drop from the previous month, the latest local official figures showed.

But many ordinary buyers are still waiting for more price drops. "I have no plan on purchasing a house now. Although prices dropped a little, it is still too expensive for me," said Wang Wei, a 30-year-old Beijing resident.

Li Chang'an, a public policy professor at the Beijing-based University of International Business and Economics, told China Daily on Sunday that the government will face great pressure curbing the property market this year in the current economic environment.

"It's a good sign to see a slower rise in the country's residential land prices. But it's too early to conclude that prices for land and housing will experience a great drop," he said.

China's consumer price index, a main gauge of inflation, rose 5.4 percent in March from a year ago, a 32-month high, according to the National Bureau of Statistics.