China to rein in house prices

The Chinese government has announced its intention to bring in measures designed to stop the Chinese property market from overheating.

An executive meeting of the State Council reached the conclusion that more needed to be done to stem the rising house prices in China's major cities, the state media reported.

New tax, credit and land supply policies were all mentioned as possible solutions to the situation, while the People's Bank of China (PBOC) is widely expected to take further action following the raising of its one-year benchmark lending rate to 5.85 per cent in April.

The State Council also emphasised the importance of more affordable housing units designed with renters in mind, while demolition of older housing should aim to reduce demand, it said.

At the end of last month, 40 of China's largest cities reported that only 12,000 of a total one million housing units were smaller than 60 square metres.

At the same time, the National Bureau of Statistics revealed property prices in 70 cities rose by around 5.5 per cent year-on-year in the first three months this year, according to the China Daily.

Chaired by Premier Wen Jiabao, the meeting agreed the need to control the housing sector to enable it to remain a "pillar industry" in China's booming economy.

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