The Construction Ministry gives four reasons for the swelling housing prices in China and the Development Research Center of the State Council predicts even higher prices for the 4 quarter of the year.

An official from the Construction Ministry believes the macro-control policy has taken effect as investment motivated spending on housing has been effectively curbed. He based his judgement on declined investment, growth of land supply under control, demolishing scaled down by 56 percent for the first half of the year, sales growth outpaced that of turnkey projects, and less idle houses. In addition, banks have put credit for developers under effective control. 20.2 percent of domestic developments is funded by loans.

The report of the Development Research Center of the State Council also agrees that the government's efforts have been justified by declined motivation of investment on housing.

Although the report recognizes somewhat overheat to some extent in the country's property sector, either the speech of the official from the Ministry Construction or the report of the State Council thinks there is a bubble in the real estate industry.

They criticized that some media and experts plug the so-called the rate of idle houses. And they attribute the surging prices to the gap between the demand and supply.

The report argues that the shortfall of the supply due to slow-down of availability basically underlay the price hike. And the official also included the brisk demand, partly brought about by demolishing, into his analyses of the reasons for price jump in the market.

There are another three factors which worked to buoyed the house prices, according to the official. The problem of the structure, higher development costs and the existing statistics system all pushed the prices upward.

The report of the State Council predicts more inflation of housing prices for the 4th quarter of the year. And the speed of increase for this year will be much faster than that of last year which stood at 4.75 percent.

By People's Daily Online