Inflated property prices drive reform

Insights: Preferential policy for property business tax ends

A survey released by China's central bank this week revealed 70 percent of Chinese people find current sky-high property prices hard to accept. On Friday, a senior official said next year's property development will focus more on affordable housing and curbing speculation.

For people in China hoping to buy a home it may be a little too late. Since 2001, property prices in Beijing have tripled, and even quadrupled in some areas. And latest figures from China's 70 largest cities, show the cost of buying a house increased by a record 5.7 percent compared with the previous year.

The People's Bank of China released a survey showing 1 in 7 people are unhappy with the surging property prices and are expecting them to go even higher. Some said they couldn't afford a medium-sized apartment... even if they had twice their salary.

Minister of Housing and Urban-Rural Construction, Jiang Weixin, said on Friday China needs to contain property prices and rein in speculation. The government's planning to build 1.8 million subsidized rental homes for the poorest population, and 1.3 million units for low and middle income families next year.

Jiang said, "The key point is to restrain the fast growth of housing prices. More small units and land will be supplied, and credit control on second homes will be more strict. Meanwhile, more effort will be taken to develop public housing for rent, as well as affordable housing, especially in cities where housing prices have been growing the fastest."

A series of measures will be implemented to curb growing speculation in the property sector. The down payment on land has more than doubled for developers.  And a new tax policy will be introduced to cool the second hand property market.

However, measures aimed at doing the same thing in the past, have failed. The so called land-champions with record high transaction fees continued to dominate the headlines, driving property prices higher. For panicky potential home buyers, perhaps renting is a better strategy.