China has confidence to stabilize housing market despite challenges: minister

Minister of Housing and Urban-Rural Development Chen Zhenggao answers questions at a press conference on rebuilding shantytowns and real estate development on the sidelines of the fourth session of the 12th National People's Congress in Beijing, capital of China, March 15, 2016. Photo: Xinhua

China is confident to stabilize and create a healthy housing market despite the huge house price disparities and too many empty houses, according to the minister of housing and urban-rural development Tuesday.

The projection on China’s housing market is based on the economic growth goal, urbanization progress, people’s housing needs, as well as the country’s macroeconomic regulation, said Minister Chen Zhenggao at a press conference during the ongoing annual session of National People’s Congress (NPC) in Beijing.

China aims to grow its economy by 6.5%-7% in 2016, and build a comprehensively well-off society by the end of 2020, when the per capita GDP will be no less than $3,000. The two goals together create a “precondition” of the stable development of housing market, said Chen.

The total house area and volume sold in 2014 decreased by 7.6% and 6.3%, while increasing by 6.5% and 14.4% by the end of 2015, and the latest figures from January and February have kept this rising trend, which, as Chen put it, shows the housing market remains stable and is beginning to rebound.

Meanwhile, with China’s ongoing urbanization, there are around 770 million people living in cities, as high as 56.1% of the total population. This figure will be increased to 60% by the end of the 13th Five-Year Plan, which means a “huge room” for the growth of the housing market, Chen said.

However, the minister also pointed to one of the biggest challenges facing China’s housing market reform – the disparity in house prices between first and second-tier cities like Beijing, Shanghai, and Guangzhou, and the third and fourth-tiers.

“While the house prices in third and fourth-tier cities are falling, the problems are mainly in the first and second-tier cities (with the prices rising too fast). Our current major task is to stabilize the housing prices of the first and second-tier cities,” he told reporters during the press conference.

The ministry has taken many measures to stabilize the red hot property market in the first and second-tier cities after the Chinese Spring Festival in February, such as purchase limitation, increasing land provision, and some other financial measures, Chen said.

In addition, inventory is another challenge facing the ministry, Chen said, mainly located in third and fourth-tier cities. House inventory nationwide was 739 million square meters (7.96 billion square feet) at the end of February, up 15.7 percent from a year earlier and widening from 718 million square meters at the end of 2015, according to Chen.

Chen reiterated the central government’s pledge to help rural residents buy houses in urban areas as part of the measures to trim the supply of unsold homes. China’s rural population migrating to urban areas for work has a “huge potential” to buy homes, Chen said, adding that local governments are implementing preferential policies to encourage migrant workers to purchase residential properties.

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