China may need to build more affordable housing next year

China may need to build more affordable housing next year provided 10 million units as the target can not be "sufficient" to meet national demand, according to the International Strategy and Investment Group.

The Government plans to almost double the supply of affordable housing 2011 of 5.8 million units this year, as it introduces more measures to curb property speculation, Prime Minister Wen Jiabao said in a radio program on 26 December.

"During the last decade, a delay of about 20 million homes have to be satisfied," said Donald Straszheim, director of Los Angeles, research in China in the ISI, which ranked first in the categories of macro and Economics survey by Institutional Investor magazine last year.

Increasing the supply of housing is one of the measures China took this year to curb housing prices. Property values up 18 months in November after the government suspended the mortgages for the purchase of a third country and the commitment to accelerate the trials of the property tax. In October, the central bank raised interest rates for the first time in three years and increased borrowing costs again on 25 December.

China also stressed the construction of social housing in its annual economic powerhouse earlier this month that sets out plans for next year, and ordered local governments to set their own targets for these households with approach to the construction of public rental housing.

Major inputs

The country has 3.7 million of the 5.8 million low-cost housing by 2010, said Wen. The government is likely to be completed 75 percent of its goal next year because "demand for commodities, labor, the ability to plan and execute, with the space, coordination of subcontractors and tickets will be significant," said Straszheim.

The increase in China's social housing will boost the nation's economic growth by one percentage point to 0.2 per year, according to Straszheim. "This is important, but not large enough to change the general course of the economy," he said in an emailed response to questions yesterday afternoon.

Only 6 percent of Chinese urban households living in social housing, including low-rent houses and apartments with controlled prices, according to a report from China International Capital Corp. in June. The government offers land that costs less than market value, and developers are forced to sell homes at regulated prices.

China's social housing is a key investment area in the government's five year economic plan, and that bodes well for the cement and machinery, according to Goldman Sachs Group Inc. in November.

$ 71 billion investment

China invested 470 billion yuan ($ 71 billion) in social housing construction this year, representing 60 percent of the budget year, the Ministry of Housing and Urban-Rural Development of 20 September, said a statement. China also attaches a subsidy of 69.2 billion yuan for the construction of these homes this year, the ministry said.

The social housing scheme may add 1.5 percentage points to economic growth in China in 2010 and 2011, Bank of America Corp. 's unit of Merrill Lynch said in a report of 15 December. The brokerage estimates that 5.8 million units, including 3 million new homes and 2.8 million renovated apartments, will cost 700 billion yuan this year. The 10 million next year planned to add another 1.3 billion yuan, he said.

Shanghai plans to 15 million square feet of affordable housing in 2011, up 25 percent this year, support from the city of Housing and Building Management Office, said on 24 December. The port city of Tianjin in northeastern China hopes that 190,000 of these households next year, the state news agency Xinhua reported on 27 December.

China's building boom continues "without ceasing" and has even increased since the government enacted policies to cool speculation, Jim Chanos, the hedge fund manager who predicted that the market may crash after 2010, said an interview Television earlier this month. Many of the policies in China have been designed to be "skirt", she said, and reiterated its view that China is in a "treadmill to hell."