China may have to build more affordable homes in 2011 than the 10 million units planned, as the target may not be enough to meet the country’s demand, said the International Strategy & Investment Group (ISI).
The central government intends to nearly double the supply of affordable housing next year from this year’s 5.8 million units, as it announces more anti-speculation measures, said Premier Wen Jiabao.
“Over the last decade, a backlog of about 20 million houses needs to be satisfied,” said Donald Straszheim, Los Angeles-based director of China research at ISI.
Among the measures taken by the government this year to curb home prices is increasing the supply of social housing. Property values climbed for an 18th month in November following the government’s suspension of mortgages for third-home acquisitions and a promise to intensify trials of real estate taxes. In November, the central bank also raised interest rates for the first time in three years and once again increased borrowing costs in December.
The government also highlighted building social housing units in its annual central economic meeting earlier in December and asked local governments to set their own targets for these homes, focusing on building public rental housing.
According to Mr. Wen, the country has completed 3.7 million of the 5.8 million low-cost homes targeted for this year.
The government will most likely complete 75 percent of its target in 2011 since “the demand for commodities, workers, the ability to plan and execute, with space, coordination of subcontractors and the inputs will be significant,” said Mr. Straszheim.
The increase in the country’s social housing will boost its economic growth by up to 0.2 percentage point every year, said Mr. Straszheim. “This is important, but not sizable enough to change the overall course of the economy.”