SHANGHAI - China may need to build more affordable homes next year than the 10 million units planned as the target may not be "sufficient" to meet the country's demand, Bloomberg News reported Wednesday, citing the International Strategy & Investment Group.
According to the report, the government plans to almost double the 2011 supply of affordable housing from 5.8 million units this year as it introduces more measures to curb property speculation, Premier Wen Jiabao said in a radio broadcast on Dec 26.
"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, who was ranked first in the Macro and Economics categories in Institutional Investor magazine's survey last year, the report said.
Increasing the supply of social housing is among measures China took this year to curb home prices, it reported.
Property values rose for an 18th month in November after the government suspended mortgages for third-home purchases and a pledge to speed up trials of property taxes. In October, the central bank increased interest rates for the first time in three years and raised borrowing costs again on Dec 25.
China also emphasized building social housing in its annual central economic meeting earlier this month that set plans for next year, and ordered local governments to set their own goals for such homes with a focus for building public rental housing.
The government will probably complete 75 percent of its goal next year because "the demand for commodities, workers, the ability to plan and execute, with space, coordination of subcontractors and the inputs will be significant," Straszheim said.
The increase in China's social housing will drive the nation's economic growth by as much as 0.2 percentage point each year, according to Straszheim. "This is important, but not sizable enough to change the overall course of the economy," he said in an e-mailed response to questions late yesterday.
China invested 470 billion yuan ($71 billion) in the construction of social housing this year, accounting for 60 percent of the year budget, according to the Ministry of Housing and Urban- Rural Development. China also allocated a 69.2 billion yuan subsidy for the construction of such homes, the ministry said.
The social housing plan may add 1.5 percentage points to China's economic growth in both 2010 and 2011, the report cited Bank of America Corp's Merrill Lynch unit as saying.
