China's overall real estate industry declined slightly last month due to slowing prices and land development activities.

The China Real Estate Index, which tracks the country's real estate industry, dipped 0.2 percent to 106.65 points in September, the National Bureau of Statistics reported yesterday.

The index started to decline in March after achieving a record high of 109 points in February.

The bureau attributed the fall to the decrease in new projects last month. In September, the index tracking land development area shed 0.8 percent.

The gradual fall in the index tracking newly developed land area is the result of the government's control on land leasing, the report said.

"Controlling land supply is the most efficient tool the government may use to adjust the real estate market," said Yin Kunkua, professor at Shanghai University of Finance and Economy. "The surging land leasing price curbed investments from the developers in some regions."

The area of newly purchased land and newly launched projects, which reflected the current momentum in the industry, also dropped.

"Housing demand remains large, but mainly in the low-end property market," said Yin. "Developers should pay more attention to average home seekers to help sustain the industry's growth."

The unbalanced supply and demand is illustrated by the rising amount of unsold finished apartments, which increased by 8.8 percent in the first nine months over the year-ago period.

The figure is widely considered as the gauge for bubbles in the property industry.

During the first nine months of this year, the nationwide average housing price gained by 4 percent from last year to 2,314 yuan (US$279) per square meter.

The growth rate has slowed down from the 5.4 percent in the first quarter.

The country's newly completed housing area still increased 0.85 point to 110 points in September. Hebei and Heilongjiang provinces saw newly finished housing area more than doubled.

"The construction industry benefited greatly from the booming real estate market," said Jiang Jiangong, general manager of China Jiangsu Construction Corp. "Rising investments helped expand our business volume."

Jiang noted that large supply in new housings will likely lead to price drop.

(China Daily October 23,2003)