Widening gap between housing supply and demand

Updated: 2013-04-18 15:10

By Mao Jing (Chinadaily.com.cn)

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China has a sufficient amount of real estate and construction space to provide housing for 120 million people, according to the National Bureau of Statistics, 21st Century Business Herald reported.

According to the data released on April 15, there are 424 million square meters of real estate for sale and 353 million square meters of construction area.

Qin Hong, director of the Department of Housing and Urban Policy Research Center, believes that the biggest problem in housing development is not the imbalance between supply and demand, but housing resources.

“Since 2011, the core of the regulation has been to increase the supply, including controlling speculative investment, building affordable houses in order to solve the conflicts of supply and demand issues,” said Zhang Dawei, research director of Beijing Centaline Real Estate.

“Estimating that it’s 100 square meters per house, there needs to be at least six months to digest the sale of 424 million square meters of housing, and the 353 million square meters of housing currently under construction can provide 3.53 million houses, so the so-called common sense conclusion of a land and housing supply shortage can not be established,” Zhang added.

However, despite the abundant housing supply, the gap between housing supply and demand in major cities is widening.

According to data provided by EJU Real Estate Institute, since the end of March, the number of newly built commercial housing in the 20 largest cities is 72.24 million square meters, the lowest level in the last 17 months, and housing stock in Beijing unprecedentedly fell below 70,000 units.

The current supply capacity of real estate is large enough, and the average housing area is not small, but there is a structural problem of housing supply. So the next step is to solve the problem of uneven distribution of housing resources, Qin said.

“On the one hand, the uneven development of public services between the eastern and the central and western regions drives the housing needs to the more developed regions, hence pushing up housing prices in those regions; on the other hand, there still exists speculative investment in the property market, leading to the imbalance of the possession of housing resources,” Qin said.

According to the requirements of the Ministry of Land and Resources, supply of residential land in 2013 must not be less than the annual average supply of the past five years.

“The requirement is the provision of principle and it still needs to be refined and differentiated.  The key in 2013 is to digest the abundant housing stocks in the third and fourth-tier cities rather than increase the land supply, otherwise, it would risk a crash in the property market,” Zhang said.

“We need to take into the consideration of the needs of urbanization to solve the housing problem. For small and medium-sized cities which have a big housing inventory, the supporting construction for industry and employment must be emphasized, or the market cannot be sustained,” said Liu Xiaoguang, Chairman of Beijing Capital Co Ltd.