Low-rent housing will be a key part of the government's real estate policy this year, an official from the Ministry of Construction said Tuesday.

"I would like to sum up the feature of this year's policy as steady, advance and strengthened implementation," Qin Hong, deputy director of the Policy Research Center of the Ministry of Construction, said at the Sina Real Estate Forum yesterday.

The central government said last year that 5 percent of land-use fees should be directed to build low-rent housing. According to 2005 figures, 5 percent could translate into 10.9 billion yuan (US$1.41 billion) that could help ease the demand for houses for low-income families, Qin said.

"But how much of them could really be in place?" she asked, adding that local governments should play key roles.

In his address to the National People's Congress last month, Premier Wen Jiabao promised to finance low-rent housing and increase the availability of affordable housing using fiscally sound tax policies.

By the end of last year, 274 cities in China had a low-rent system in place. However, there is a need to balance the housing flow across various regions.

"More policies are in the pipeline to balance the regional differences," said Qin, adding the 5 percent of land-use fees from out-of-the-way areas could hardly support the construction of low-rent homes.

Meanwhile, shrinking the gap between demand and supply remains the focus of this year's real estate policy, said Gu Yunchang, vice-chairman of China Real Estate and Housing Research Institution.

Due to the soaring economy and ballooning wallets, demand for housing improvements is growing fast. Meanwhile, the present limited investment channels have also fuelled people's desire to invest in property that has helped to boost demand.

However, skyrocketing demand and shrinking supply have driven up China's property prices despite measures to cool things down.

March property prices in the country's 70 large and medium-sized cities saw a jump of 5.9 percent compared to one year ago. There was also a growth rate of 0.6 percentage points higher than February, the National Development and Reform Commission said yesterday.

Beihai, Shenzhen, Changsha, Beijing and Guangzhou are among the top five in terms of the price hike.

"To reduce the gap, we shall increase the supply of small-sized apartments and expand investment channels through financial innovation," Gu said.

According to a regulation from nine ministers last May, apartments smaller than 90 sq m shall account for 70 percent of residential supplies.

However, in the first quarter of 2007, the investment in those small-scale apartments accounted for just 16.1 percent, the commission said in a report on Monday.

(China Daily April 18, 2007)