Dubious real estate numbers

Some real estate developers manipulate statistics to fool the public, says an article in the Guangzhou Daily. Following is an excerpt:

Ren Zhiqiang, a Beijing-based property developer, recently said China's GDP was only 300 billion yuan ($43.9 billion) in 1978 but it has now exceeded 30 trillion yuan, rising more than 100 times from three decades ago. The national average salary of Chinese workers has also jumped by 100 times to 2,860 yuan in the past three decades. Similarly, Chinese cabbage sold at only 2 fen (100 fen equal 1 yuan) for half a kilogram in 1978, 100 times less than what it is selling for now.

Based on the above comparison, Ren concluded housing prices have risen at a very slow speed, only seeing a 16.6 times rise compared with 30 years ago.

This conclusion is not accurate. First, it is wrong to say that GDP increase should be the same as that of a price hike in goods. When Ren compared the rise of housing prices to that of GDP, he left out the fact that China did not have a commercial housing market three decades ago.

Second, representation was inadequate when Ren chose Chinese cabbage as a reference. Why did he not choose computers instead? A computer was priced at about 10,000 yuan a decade ago; but now you can buy a much better computer for 2,000 yuan. By this logic, can we say current housing prices should be only one-fifth from that of a decade ago? According to statistics, the national average housing price in 1999 was 1,984 yuan per square meter. We can easily calculate the results: The current housing price should be 396 yuan per square meter. This result also tallies with Ren's logic.

We should not manipulate statistics to mislead the public. Realty developers should abandon their support for price hikes and understand the real situation of consumers on the ground.

(China Daily 04/21/2009 page8)