New China property data mark improvement, say economists

BEIJING: Economists on Thursday, Feb 17 cautiously welcomed reforms of China's system for reporting property price data, saying the changes would improve on previous methods that severely underestimated inflation in the housing sector.

The National Bureau of Statistics (NBS) announced this week that it was scrapping a nationwide property index and would instead publish price changes for individual cities, starting from Friday.

Because there was incredible variation in the 70 cities that composed the index, from the cosmopolitan financial hub of Shanghai to the coal-mining town of Pindingshan, analysts had said that the headline number was not representative of anywhere in particular.

The monthly data had also become a lightning rod for public discontent, with people complaining that the government's numbers were at odds with a red-hot property market that was making housing increasingly unaffordable.

"The new data will be more detailed and specific, and that will make the data more reliable," said Zhao Ruoqiong, a property analyst with Minsheng Securities in Beijing.

China also announced a change to the way it calculates the consumer price index this week, though economists were less complimentary of this adjustment, saying that it could exacerbate distortions in inflation statistics.

In another change to the property data, the NBS said it would collect data directly from transaction databases in the country's 35 biggest cities, rather than relying on reports from property developers.

"The new system will make the data from the NBS more reliable, and it is a very positive move," said Yang Guohua, a property industry analyst with Orient Securities in Beijing.

"To be honest, the previous official index only served as a reference for us," Yang added.

Controversy over the 70-city index built to a crescendo early last year when the NBS announced that housing prices in China had risen only 1.5% throughout 2009, despite evidence of bubble-like conditions in some major cities.

The NBS will publish price information for 70 cities at 0200 GMT on the 18th of every month, starting from Friday.

It will provide subindexes for newly-built homes and second homes, as well as for homes smaller than 90 sq m, between 90 sq m and 144 sq m in size and larger than 144 sq m. — Reuters

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