Chinese statistics are notoriously unreliable. But a revelation from the National Bureau of Statistics (NBS) last week that there were problems with property price data in Shanghai was particularly worrying.
The NBS revealed that property developers in Shanghai have been falsifying answers on pricing surveys. The problems range from the reporting of incorrect prices to the omission of pricing information completely.
Earlier in August, the Bureau claimed that prices in 70 major cities had climbed 10.3% in July from a year earlier. That was hailed as a victory, as it was slower than the growth rate recorded in June.
Meanwhile, the NBS Shanghai branch said that sales of new homes in Shanghai fell 48% in floor area terms in the first seven months of 2010 from a year earlier. Or did they?
The NBS is the country’s central authority for publishing housing statistics. Its monthly reports are the main gauge for assessing national housing market conditions.
But being the only authority doesn’t necessarily make the data any more reliable, Yang Hongxu, an analyst from E-House China R&D Institute, told the South China Morning Post.
Yang said the errant Shanghai developers were not the only ones submitting incorrect information. Many others were likely to be doing just the same. Industry observers say developers have been reporting artificially low prices to make it look like the market is cooling. The alternative – giving the true data – might see the government come up with another round of policies to rein in bubbly house prices.
Homebuyers have long been sceptical of some of the figures published by the NBS, saying that they often understate how expensive property has become. In February, when the Bureau announced that prices were growing a mere 1.5% on the year before, there was public incredulity. Better move the decimal point to the right, was the reaction. Try something nearer to 15%.
In April, Beijing then puffed out its chest with a policy clampdown, announcing a series of measures intended to reduce the speculative heat. Downpayment requirements were raised, and restrictions were introduced on the purchase of multiple homes. There were also sweeping rumours that a new property tax might be introduced, with Shanghai and Chongqing marked out as potential pilot cities.
It seemed to have some impact. Sales volumes dropped significantly in May and June, even if prices remained stubbornly high.
But uncertainty about what is really going on has been growing. Niu Dao, an outspoken critic of property prices, recently published research in which he said that a staggering 64.5 million urban residential electricity metres had registered zero consumption over the previous six month period. The inference: nobody at home.
Power companies and government officials quickly denied Niu’s claims, but not before theories began to circulate that property capable of housing 200 million people is going unused.
Disputed or not, analysts have been arguing that empty stock should be formally reported, as an important measure in gauging the seriousness of the nation’s property bubble.
The NBS has demurred, saying it is not feasible to capture property vacancy statistics in this way.
So, it must have been a little embarrassing when officials in Beijing’s Chaoyang District seemed to manage just that. Last week, the capital’s largest district issued a report suggesting that 1.33 million square metres of residential space was vacant in Chaoyang. Worse, over half of the space has been empty for at least three years, says Caixin magazine.
The empty flat data provides a good picture of the scale of property speculation, says Andy Xie, an independent Shanghai-based economist. By his estimation, the vacancy rate in private housing is between 25% and 30% (double what is required in more normal market conditions).
More worryingly, Xie says that the value of the empty flats held by speculators accounts for around 15% of national GDP.
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