The Ministry of Construction yesterday denied reports that
housing supply in some cities is insufficient, but admitted
inconsistencies in the type of units available.
Data from 40 major cities shows that housing supply can satisfy
normal market demand, said a ministry spokesman.
However, some cities have an oversupply of expensive apartments
and a shortage of affordable housing.
At the end of April, the 40 cities had 1 million apartments with
a total 120 million square meters on the market, of which only
12,000 units were smaller than 60 square meters.
As house prices in China are relatively high compared with
incomes, people tend to buy small apartments, said the
spokesman.
The ministry has instructed local planning departments to
readjust the supply balance in favor of smaller apartments, and
this is having an effect, he said.
Since 2004, the government has taken measures to stop the
property market from overheating, but prices have kept rising and
investment is still pouring into the sector, he said.
Analysts are divided as to how serious the problem is with some
holding that the vacancy rate is at a highly dangerous level of 26
percent.
Some warn of an impending "bubble" and urge tough measures to
bring down the vacancy rate while others insist rising prices are a
proper reflection of insufficient supply.
(China Daily May 15, 2006)