Average house prices have climbed 2.5 percent over those of the corresponding period last year, according to a market survey conducted by the State Development and Planning Commission and the National Bureau of Statistics in 35 cities nationwide.

The commission and bureau have not make public the average price, but the bureau said the price of a house built for middle- and high-income home buyers averaged at 2,368 yuan (US$285) per square metre for the first five months of 2001, 200 yuan (US$24) up on the same term in 2000.

Luxury homes, such as villas, have been selling well and their prices have also climbed, gaining a year-on-year increase of 1.2 percent.

According to the survey, the rentals market is becoming increasingly buoyant as average rent prices this quarter were 3.1 percent higher than those of 2000.

Thanks to government regulations on land use, the average price of land used for housing construction only rose by 0.4 percent, compared with the same period last year.

Real estate officials were upbeat about stable growth in the housing sector, but urged related departments to regulate housing markets in certain cities in a bid to curb abnormal price rises.

"Generally speaking, the whole real estate market in China has entered a vibrant period and I think it will last for a relatively long time," said Xie Jiajin, director of the Real Estate Department under the Ministry of Construction.

Considering increasing demand from home buyers and other factors, there is no further room for lower prices, Xie said. "In most cities prices will continue to climb."

However, Xie said unreasonably high house prices in some cities have frustrated buyers' enthusiasm.

Xie cited an example, South China's coastal Guangdong Province.

A real estate developer for a housing project in the province has increased prices 17 times within two years, rising to 4,500 yuan (US$544) per square metre in 2000 from 2,300 yuan (US$278) per square metre in 1998.

Meng Xiaosu, deputy chairman of the China Association of Real Estate Agents, echoed Xie's view.

"The first 10 years of this century will be a golden time for China to develop its real estate," Meng said.

Meng's optimism hinges on China's long-awaited entrance to the World Trade Organization, although the accession itself will have little direct impact on the real estate industry in China.

"China's forthcoming entry is destined to influence China's automobile industry and financial sector," Meng said.

"After the international automobile industry starts competing with State companies, car prices will decrease and buyers will have more disposable income to spend on housing," Meng said.

According to Meng, financial organizations will provide good services to potential home buyers after China's financial sector opens further to foreign countries.

"Changes in the sector will help boost the housing market," Meng said.

(China Daily 07/23/2001)