Beijing Mayor Guo Jinlong on Tuesday dismissed claims that the municipal government's drive to build more affordable housing will dampen the city's real estate market.

The municipality unveiled plans for cheaper homes at the end of 2008 to provide a total of 8.5 million square meters of price-restricted housing in 2009.

"The affordable housing project targets the low-end market, which will not impede the development of the city's high-end real estate market," said Guo, rebuffing concerns raised by political advisors.

"As the urban area is limited, the real estate market is expected to boom," he said.

The city, with a resident population of 16 million, covers 16,000 square km, of which more than 10,000 square km are mountainous regions.

Political advisors with the real estate sector have voiced warnings that the municipal government's affordable housing strategy could squeeze out realty investment.

"Private capital will be scared away by a large-scale affordable housing project that is expected to cause a recession in demand," said one of the most outspoken dissenters, Ren Zhiqiang, a member of the Beijing Municipal Committee of the Chinese People's Political Consultative Conference.

"It will ultimately lead to a flagging real estate market and an economic slowdown," he said.

Contributions from the property industry account for a quarter of Beijing's tax revenue.

The Olympic city, like many other cities in the country, has seen skyrocketing house prices.

However, prices in 70 large and medium-sized Chinese cities fell 0.4 percent in December from a year earlier, the first fall since the government began releasing the data in 2005.

The Beijing market, however, seemed immune from the price fluctuation.

Second-hand homes in the city are priced at more than 13,000 yuan (US$1,900) per square meter, which is unaffordable for most people.

(Xinhua News Agency January 14, 2009)