China today said its property market will continue to experience steady and healthy development because of sound economic fundamentals and enormous housing demand as it ruled out a real estate “bubble” similar to the one faced by Japan in 1980s following the economic slowdown.
“The Chinese residential property market is unlike the housing bubble experienced by Japan in the 1980s,” China’s Minister of Housing and Urban-Rural Development Chen Zhenggao said on the sidelines of the annual parliamentary session.
The Japanese asset price bubble was an economic bubble in Japan from 1986 to 1991 in which real estate and stock market prices were greatly inflated.
The situation in Japan was set against a completely different political and economic backdrop. Today’s China and Japan have distinctly different conditions with different levels of urbanisation, economic development and government measures, Chen said.
China’s central cabinet aims at rebuilding 18 million housing units by 2017.
“I am confident in the development of the sector,” he said, citing several “favourable factors” including the economic growth, the rapid pace of urbanisation and huge demand from the urban population.
China has cut down its target for GDP this year to 6.5 to seven per cent after it slipped to 6.9 per cent last year.
Many felt that the economic slowdown will have major impact on the real estate which thrived during the heydays of the three decades of China’s double digit growth till 2010.
China’s property market has shown signs of warming since the middle of last year, reversing the 2014 downturn, but new problems are emerging, including soaring prices in metropolises and an inventory backlog in medium and small-sized cities due to the emergence of ghost cities.
There were 739 million square meters of unsold homes by the end of February, up 15.7 per cent year on year, state-run Xinhua news agency reported. To address the issue, policymakers identified the reduction of housing inventory as one of the top priorities for this year, and announced a slew of measures such as reduced levies and lower deposits.
Asked about home purchases by migrant workers, Chen said favourable measures would be rolled out to help them buy homes, find jobs and settle down in cities.
Agricultural Bank of China issued loans worth 17 billion yuan (around USD 2.5 billion) in January to home-buying migrant workers, Chen said, adding that despite the slowdown, he was confident that China would achieve this year’s renovation target for substandard houses.
The reconstruction target for this year has been set at six million housing units, Ni Hong, Vice Minister of Housing and Urban-rural Development said.