Government controls may drag down housing prices by 30 percent: official
15/11/2004 16:54
Jane Chen / Shanghai Daily news
Despite no bubbles
yet emerging in China's housing market, if the government takes macro measures
to curb their fast growth, housing prices may be squeezed down by about 30
percent.
Yang Shen, chairman with China Real Estate Association, made these
remarks last Saturday in Chongqing, in West China, at a property
forum.
"Though I agree that China's existing property market is not
overheated and no bubbles have yet appeared, housing prices are growing at an
abnormally fast pace, one that has never happened in other countries," he
said.
In the past few decades, China has built 7.4 billion square meters of
commercial buildings, but the average living space remains low, at about 24
square meters per capita, one-third the level of advanced Western countries and
two-thirds of the developing countries, Yang noted.
The gap is unlikely to be
bridged if the country's housing prices continue their present fast growth, a
pace that is not affordable, he said.
Citing the cost structure of the
housing industry, Yang believed the growth rate could be slowed down and the
existing housing prices squeezed down by 30 percent by government administrative
interference.
"This is possible, because land price has dominated the total
cost of a housing project, usually amounting to some 40 percent," he said.
Construction, materials and taxes follow with 30 percent, 20 percent and 10
percent.
Since the government controls land price, it can make efforts to cut
the property cost, he noted.
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