China's property prices will rise only 10% in 2005, Xinhua reported, quoting a National Bureau of Statistics official. Jia Hai, deputy director of the bureau's investment department, made the prediction after noting that price gains in the first 11 months of 2004 were 12.5% y/y, 6.7 points higher than the same period a year earlier. Jia said the slowdown was a sign that Beijing's efforts to cool the economy were working, circumventing a market bubble. But he cautioned prices would continue to rise fast, owing to the government's unprecedented urbanization drive, which calls for flattening 100m sq m of older housing in 40 cities each year, and building anew, pushing up demand and prices for building materials. In the first 11 months of 2004, the general property price rise of 12.5% brought prices to an average RMB 2,759 per sq m. Residential prices rose 11.6% over the period, according to NBS data.
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