High property prices lead to costly housing

It usually takes years for developers to begin construction after they buy a piece of land at record high prices. But as sales begin, will these developments really meet ordinary people's housing demand?

This was one of China's most costly piece of land in 2007. The building lot in Beijing was bought for 1.7 billion yuan. That is equal to a per unit cost of around 11-thousand yuan per square meter. But now, homes being offered for sale on the land are being sold at 30,000 yuan per square meter.

A Beijing resident said, "I can't afford it at all. What I can do is sigh with regret."

Not far away from the complex is this year's prime building lot. Its transaction price was 4 billion yuan, with a unit cost worth 15-thousand yuan per square meter. This was already near the price of neighboring pre-owned housing prices.

Li Shiyong from Gentaline said, "Based on the cost, if the land is developed into complexes and starts sales right now, the average housing price will be around 25-thousand yuan per square meter. If sales start two years later, the price will reach between 35-thousand to 40-thousand yuan."

However, many people say prices that are affordable for them are between 6-thousand to 10,000 yuan per square meter. It means all projects constructed on these expensive plots of land will not ease the pressure to build affordable housing.

Yan Jinming, managing director of China Land Science Society,said, "It's understandable that developers can barely earn back their cost by catering to needs of ordinary people. Therefore, they have to target the high end market."

To help solve the problem, many experts are suggesting the government improve the current land supply structure by increasing supply for guaranteed housing such as low-rent housing and affordable housing.