Chongqing Municipality in southwest China had raised its proportion of land supply for affordable houses for low-income residents from last year's 5 percent to 10 percent in May this year, according to the local government.

The move, greatly relieving the fear of local citizens for short low-price apartments supply in the coming years, pull down Chongqing's average housing price by 5.3 percent in May compared with the first quarter.

"Since the beginning of this year, the central government has called for cooling of rocketing housing price. In response, local governments across the country have increased land supply for affordable houses as well as medium- and low-price commercial apartments," said Wu Haiyang, deputy director of the land utilization department under the Ministry of Land and Resources (MLR).

"It is true especially after seven ministries jointly issued a circular last month," Wu said.

China's sizzling property market has seen price rocketing since the beginning of 2004. Figures from the National Bureau of Statistics show that last year's average housing price rose by 14.

4 percent in China. In Shanghai, the average per square meter price in its urban and suburban areas exceeded 10,000 yuan (1,207.7 US dollars) in 2004. Price of some residential apartments increased 20 percent in a few months.

The inadequate supply of low-price houses partly drove up the price, said Wu. NBS figures show that in China's real estate market, the proportion of affordable housing, built for the needy,had reduced from 6.1 percent in 2003 to 4.6 percent in 2004, indicating slimmer chances for the low-income group to buy houses.Meanwhile, luxurious apartments and villas had boomed in big cities.

Thin profits of property developers in affordable houses partly led to fewer supply, said industry observers. Another reason is that local governments are not active in building affordable houses, as they could sell the land at a better price to commercial housing developers. Targeting all these problems, early May, seven departments of the State Council, China's Cabinet, jointly issued a circular, putting heavier pressure on local governments to stabilize the price and stressing more land supply to medium and low-priced, as well as medium and low-sized apartments.

Statistics from a recent MLR meeting attended by land officials from 28 big cities show that local governments are adopting a more active attitude, and Chongqing is not the only one that carried out the circular well.

In Shanghai, where many believed the housing bubble exists, the government plan to supply 2,000 hectares of land for building ordinary apartments, 138 percent higher than last year. The figure also represents two thirds of the total land supply for residence this year.

In Ningbo, a coastal city of east China's booming Zhejiang province, the proportion of land supply for affordable houses stood at around 25 percent, compared with only 3 percent last year.

"Thanks to these measures and the media efforts to publicize these data, the rocketing price hike in some big cities have slowed down and the property investment growth started to decline," said Yun Xiaosu, MLR vice minister at the meeting.Wu Haiyang, who is also a land expert, perceived the move from a long-term perspective. "To increase land supply to medium and small-sized apartments means to increase the land utilization rate," said Wu. "Given that the land resource is scarce in China, the idea to encourage medium and small-sized apartments should be adopted as a long-term strategy."

Source: Xinhua