No end to surge in property prices

PUBLISHED : Saturday, 28 April, 2007, 12:00am
UPDATED : Saturday, 28 April, 2007, 12:00am

A central government think-tank and the nation's top planning agency have predicted continued rises in Guangzhou property prices, despite the city's efforts to counter the trend.

In its annual report on the mainland's real estate market, the Chinese Academy of Social Science predicted Guangzhou's increasing population and flourishing economy would mean the city's 'property prices will keep rising steadily this year'.

Guangzhou is one of five cities in the country with a population of more than 10 million which would guarantee strong demand in the future, the report said.

Expectations of a further appreciation in the yuan would attract a big increase in foreign investors this year, it said.

The National Development and Reform Commission also has said that Guangzhou's property prices are still rising even though the city's housing management bureau announced a 9.1 per cent drop in prices last month.

Property expert Han Shitong said the academy's forecast might strengthen the central government's discontent with Guangzhou's fruitless price control measures.

'It was a reminder to the Guangzhou government that they should be more practical instead of producing empty talk,' Dr Han said.

During the National People's Congress last month, Guangzhou Mayor Zhang Guangning told city residents to trust the government's efforts to cool the market and rein in prices.

'But when he came back to Guangzhou he changed his tone, [pledging only] to 'reduce the growth rate',' Dr Han said.

A city housing management bureau spokeswoman said property prices were determined by the market and the government only had the power to increase the supply of land.

'What Mayor Zhang meant [in terms of cooling the market] was that the government needed to build more affordable housing. None of the measures we take will interfere with the market,' she said.

Dr Han said he agreed that the government could not use administrative means to lower property prices except to increase the supply of land and housing.

But he questioned efforts over land supply, given that last year Guangzhou released only 2.06 square kilometres of land, or 24 per cent of the year's target.

'How can they accomplish this year's target of supplying 5 square kilometres of land,' he asked.

Despite doubts over whether Guangzhou was doing enough to cool its property market, one analyst noted that two senior officials overseeing the sector were promoted recently, unlike in Shanghai where several leaders lost their jobs.

Former housing management bureau director Jian Wenhao replaced Chen Rugui as head of the city construction committee, while Chen Rugui became secretary-general of the municipal government.