Chinese consumers tend to cast a wary eye on monthly real estate data produced by the country’s National Bureau of Statistics, but a new method of data collection being pioneered in one of China’s hottest real estate markets may cause them to sit up and take a closer look at the figures.
The Shanghai Municipal Statistics Bureau will start to collect property data from an online registry in which home buyers key in their purchase prices, folding those numbers in with pricing information gleaned from transaction reports filed by property developers, the bureau’s chief economist announced in a press conference this week.
Eugene Hoshiko/Associated Press
In this Dec. 7, 2010 photo, an aerial view of new residential area is seen in Shanghai, China. The city, which boasts one of China’s hottest housing markets, has announced plans to change the way it collects data on housing prices amid criticism that official statistics are unreliable.
Newly built residential property prices in Shanghai rose 7.6% year-on-year in 2010, according to the bureau’s calculations—a figure that falls far short to private sector estimates. According to the China Real Estate Index System, maintained by Soufun Holdings Ltd, a U.S.-listed real estate agency, property prices in Shanghai rose 13.4% in 2010.
The stubbornness of housing inflation in major Chinese cities like Shanghai has lead to widespread public dissatisfaction and cynicism over the government’s ability, or willingness, to tighten the reins on the country’s runaway real estate sector. Many Chinese citizens scoff at the accuracy of official property pricing statistics—traditionally based solely on information provided by real estate developers, which many say don’t fully reflect the sharp swings in housing prices in recent years.
Home buyers and investors have few resources beyond official government numbers with which to develop a clear picture of China’s property market. Investment houses and private sector agencies typically track prices with a bias towards properties developed by listed companies. Slanted though that information may be, however, analysts say it’s currently the best indicator of the strength of the central government’s regulatory moves.
Are citizens likely to get a clearer picture of changes in Chinese property prices with the new method? That’s a question that the bureau’s economist, Cai Xuchu, couldn’t answer at the press conference on Tuesday.
“It’s still under study,” said Cai. “After all, there is no base to gauge if this is more reliable. If it is indeed a more effective indicator of property prices, then we would consider relying on it more extensively next year.”
Beijing and Shenzhen will also be adopting the new methodology this year, Cai said.
In an effort to cool the housing market, China last year raised down payments and mortgage rates while limiting home purchases in some cities. It also raised interest rates twice last year.
Physical property prices remain high despite those moves, and many Chinese citizens remained unconvinced that Beijing is on the side of the genuine home-buyer, especially with only mild increases in the official property index—a measure of changes in urban property prices–last year.
Official statistics show that urban property prices rose only 0.3% nationwide in December compared with the previous month, following a 0.3% rise in November and a 0.2% gain in October. Urban property prices rose 6.4% in December from a year earlier.
The Shanghai statistics bureau said last August that spot checks earlier in the year revealed some of the city’s property developers had failed to properly compile property price data, partly because of indifference among employees to reporting it. The new online registry system would presumably compensate for developers’ failure to report accurate data.
However, there are still loopholes in the online registry. For instance, homebuyers might underreport prices in order to pay lower transaction taxes. Conversely, some might over-report prices in order to apply for a larger mortgage.
With Shanghai scheduled to introduce a new real estate tax that is widely expected to impact newly-purchased homes, the former could be more of a problem than the latter.
–Esther Fung