Backgrounder: China's home price trend, big events in recent years

During an online chat on Feb. 27, 2010, Chinese Premier Wen Jiabao talked about China's housing prices in response to questions from Netizens. Following are some basic facts in China's housing sector:

China's home prices in 70 large- and medium-sized cities, a housing price trend barometer, rose 1.5 percent in 2009 year on year, the National Bureau of Statistics (NBS) said Thursday.

Property prices in these 70 cities increased 9.5 percent year on year in January 2010, NBS figures indicated, showing the continuing home price rising momentum, which triggered new government concerns and public complaints.

Analysts attributed the house price surge to growing domestic demand, speculative deals and a relatively easy credit.

Chinese home prices began to pick up momentum since May 2009 and a sharp residential property price hike nationwide accelerated fears that a property bubble was forming. China's central and local government were taking measures to deflate the bubble.

The General Office of the State Council, China's Cabinet, on Jan. 10 issued a notice that required central governmental departments and local governments to strengthen management, stabilize market expectations and facilitate stable and sound development of the real estate market.

The notice listed 11 specific measures, including increasing supply of low-cost houses for low-income families and common residential houses, encouraging reasonable house buying while restraining purchases for speculation and investment, strengthening real estate project loan risk management and market supervision, and specifying responsibilities of local governments.

The central government required that the down payment requirement for those families applying to buy a second or more homes backed with loans should be no less than 40 percent, and the mortgage rates should be strictly settled on the basis of loan risks.

The Beijing Municipal Bureau of Land and Resources on Feb. 1 said it had revoked the right of Beijing Dalong Weiye Real Estate Development Co. to buy a land after it missed the deadline for signing a land transfer agreement.

Dalong was not alone. Authorities in the eastern city of Nanjing said on Feb. 3 they had revoked the rights of two property developers to buy a residential plot they won at a auction two years ago.

Analysts said these moves showed local governments' commitment to pouring water on the sizzling property market and stabilizing home prices.

Chinese Premier Wen Jiabao said on Dec. 27, 2009 during an exclusive interview with Xinhua that the government would maintain order in China's property market while cracking down on illegal activities that had driven up housing prices.

China's home price saw a slowdown pace in 2008 partly due to the impacts brought by the global economic downturn and a home price surge in 2007.

Chinese housing prices began to pick up since April 2007 boosted by rising demand and a strong economic growth, with home prices in 70 large- and medium-sized cities nationwide up 7.6 percent for the whole year in 2007 compared with 2006, NBS figures showed.

The annual year-on-year home price growth rate in 2007 was 2.1 percentage points higher from 2006 level.

In July 1998, the Chinese government launched a housing reform and introduced a quasi-market-based system in which 80 percent of urban people were expected to buy subsidized housing provided by the government, leaving the other 20 percent to the commercial housing market.

Source: Xinhua