China to Continue Macro Control Over Real Estate Sector in 2006

China's Minister of Construction, Wang Guangtao, announced that the government will continue to implement macro control measures over the real estate sector in 2006, with a focus on adjusting the housing supply structure to control luxury houses and increase the supply of medium and low-price level ordinary houses catering to low and medium-income earners. The aggregate fixed asset investment in the sector will also be kept under control. These measures have shown initial positive achievements, including checking the excessive growth of investment in real estate development, controlling the aggregate land area for real estate development, and slowing down the housing price hike.

Key Takeaways:

• The Chinese government will continue to intensify macro control over the real estate sector in 2006, aiming to adjust the housing supply structure to control luxury houses and increase the supply of medium and low-price level ordinary houses.
• The aggregate fixed asset investment in the sector will be continued to be put under control to prevent excessive growth.
• The measures implemented in 2005 have shown initial positive achievements, including a reduction in the annual growth of investment in real estate development from 28% in 2004 to 21% in 2005.
• The aggregate land area for real estate development has been controlled, with the mix of land use improving, resulting in a 2.2 percentage point increase in the proportion of land for economy houses year-on-year.
• The housing price hike has slowed, with the month-on-month price rise in 70 major cities across China averaging 0.6% in the second half of 2005.
• The measures have also curbed speculative housing demand somewhat, suggesting a positive impact on the real estate market.

Statistics:

• The annual growth of investment in real estate development in 2005 is estimated to stand at 21%.
• The annual growth of investment in real estate development in 2004 was 28%.
• The aggregate land area for real estate development has been controlled, with a 2.2 percentage point increase in the proportion of land for economy houses year-on-year.
• The housing price hike has slowed, with the month-on-month price rise in 70 major cities across China averaging 0.6% in the second half of 2005.

Sources:

• Wang Guangtao, Minister of Construction, quoted in Asia Pulse, "China to Continue Macro Control Over Real Estate Sector in 2006", Asia Pulse, December 28, 2005
• XIC, "Real Estate Sector's Investment Growth Slows Down in 2005", Xinhua, December 26, 2005