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Real Estate Prices on the Rise

China's real estate prices continued to surge during the first eight months of this year due to increasing market demands and limited investment tools.

Figures from the National Bureau of Statistics show the average housing price in China hit 2,749 yuan (US$331) per square meter from January to August, an increase of 13.5 per cent over the same period last year.

While, the unit price was 3,421 yuan (US$412), 1,672 yuan (US$201) and 1,700 yuan (US$205) in the eastern, middle and western regions of China respectively, up 15 per cent, 14.7 per cent and 7.7 per cent in the first eight months of last year.

"The price climbing is stimulated by booming market demands," said Chang Xiuze, a researcher with the Macro-Economy Research Institute of the State Development and Reform Commission.

Along with income increases and living standard upgrades, most people first consider improving their housing conditions.

To date, more Chinese people find the current interest rate level unsatisfactory and have become more reluctant to make new deposits.

"Furthermore, investment channels in China are rather limited at present, thus consumers prefer pooling money into the property market," said Chang.

Mou Xin, marketing supervisor of Xie-Cheng, a real estate consulting company, pointed out the booming market demand was also built up by some property developers, who said the price will rise sharply in the near future because land cost is expected to increase.

But, both Chang and Mou believe the housing price will stay stable or only rise slightly.

Due to the central government's restricted macro-economic control policy, the increase rate of loans extended to property developers declined. Meanwhile, bank loans to real estate enterprises still amounted to 211.2 billion yuan (US$25.45 billion) from January to August, a rise of 8.9 per cent year-on-year, with the growth rate dropping 50 percentage points.

(China Daily September 18, 2004)

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