Despite government measures to rein in the real estate market, prices for Shanghai's new residential buildings are expected to jump 6.1 percent this year over 2006.
The growth rate will be higher than the increase in 2006, according to a report by analysts at E-house China R&D Institute.
Other Chinese cities witnessed even higher property price increases than Shanghai last year, causing concern among central government leaders.
Vice-Premier Zeng Peiyan recently said that control of the property market is important in the Year of the Pig.
Minister of Construction Wang Guangtao also said market mechanisms alone cannot solve the problem of social inequality in housing. He called access to housing a basic human right and a primary form of social security.
The central government is likely to take stronger action in the coming year.
After previous measures to bring down housing prices and regulate the housing market failed to meet expectations, it is widely expected that controls this year will include those on the supply of housing funds, as well as taxation, land sales and housing for low-income families.
The hot talk now is that a new property tax might be introduced this year, although reports show that the Ministry of Finance and Ministry of Construction still have to come to terms over a workable plan.
There is no doubt that property developers and real estate agencies will continue to face heavy pressure in 2007.
In Shanghai, thousands of real estate agencies have closed in the last two years due to the slack market. Global property services specialist Jones Lang LaSalle announced before the Chinese New Year that it will shut down its mainland residential business unit following a string of government measures to cool down the high-end housing market.
Buyers, meanwhile, are mostly likely to adopt a wait-and-see attitude in the face of many uncertainties.
No one seems certain what the target is of ongoing efforts to impose controls or what are reasonable housing prices for Shanghai and other cities.
Whatever the price, it is unreasonable and impossible to see Shanghai's housing prices lower than those in small cities of neighboring Zhejiang Province. The Ministry of Construction, which regulates the sector, should make this clear.
Solely blaming developers for the rising prices is unfair when local governments lease land at exorbitant prices.
Ministries should also work together so that their policies achieve more synergy rather than conflicting with each other.
(China Daily February 27, 2007)