Top Biz News

Beijing house prices up 17.3%

By Le Tian (China Daily)
Updated: 2006-03-25 11:22

House prices in Beijing surged around 1,000 yuan (US$124.3) per square metre in the first two months of this year, up 17.3 per cent from the same period last year, according to the Beijing Construction Committee.

The rise took place despite the central government's efforts to curb mounting house prices in major Chinese cities.

According to a report of the committee, house prices averaged 6,776 yuan (US$842.8) per square metre. The prices are much higher than many people can afford as per capita income of the city was 17,653 yuan (US$2,195.6) last year,

Zhang Jin, 26, who works for a private company in Beijing with a monthly salary of about 5,000 yuan (US$621.8), said he feels a lot of pressure to buy his own house.

"A 100-square-metre apartment would cost me at least 15 years of accumulated earnings based on my current income," Zhang said.

However, experts predicted house prices in major cities like Beijing, Shanghai and Hangzhou would continue to rise.

"House prices in Beijing will rise steadily this year," Zhai Lujing, a researcher at the Beijing Urban Construction Research Centre, told China Daily.

Zhai's centre is responsible for doing the annual research report on the city's real estate market for the Beijing Construction Committee.

"But rises will be smaller than last year thanks to tight government policies in the real estate market," she said.

The price for ordinary residences averaged 6,721 yuan (US$836) per square metre in Beijing last year, according to a report made by Zhai's centre early this year.

Speculation by real estate developers in connivance with some local governments has helped house prices to keep rising, according to Zhang Qunqun, a researcher from the Chinese Academy of Social Sciences.

To curb speculation and rein in the red-hot sector, the government introduced stricter taxation policies last year and tightened land supplies.

The government began levying a 5 per cent business tax last June on the full amount received from selling a home if that home was sold within two years of being purchased.

The central bank also ended a preferential policy for mortgages, raising the interest rate on such loans with terms of more than five years by 20 basis points to 5.51 per cent.

Hoping government policies could bring down surging prices, many people have a wait-and-see attitude on whether to buy a house now.

"I want to wait two or three years," Zhang said. "Maybe prices might drop a little before I get married and need a house."

Because of this reluctance to buy now, fewer homes are being sold in Beijing. According to newly-released figures by the Beijing Construction Committee, about 1.17 million square metres of commercial houses were sold in the first two months of 2006, down 24.5 per cent from the same period of last year.

The situation is the same in other major cities. According to a survey conducted among 20,000 people in 50 major cities last month by the People's Bank of China, a record low of 18.2 per cent of them have plans to buy private homes within the next three months.

That was a drop of 1 percentage point from the previous quarter and 3.8 percentage points from the same period a year ago.

The central bank said the decline in Beijing, Tianjin and Shanghai was the most prevalent.