The skyrocketing prices of property could harm the financial security and social stability of the nation, a senior housing official warned on Friday.

Qi Ji, vice-minister of housing and urban-rural development, made his remarks in response to claims made by his colleague, Chen Huai, that it will take 30 years for China to make homes affordable for its people.

"Without intervention, rapid increases in property prices in some cities could spread to more regions," he said in support of the central government's tough measures dubbed by many as the strictest ever to cool the sizzling property market.

The latest measures to tighten credit have taken effect, Ji said.

In April, central government officials introduced a series of measures to crack down on speculation in the real estate market after home prices rose by a record 11.7 percent in March in 70 major Chinese cities.

"Excessive gains in prices are mainly due to a shortage of supply, and a major part of the demand for housing is due to unreasonable demand," Qi said.

"The government will strictly carry out current measures to curb such demands," he said.

These include more restrictive down-payment requirements, higher interest rates, a ban on lending for third-home purchases, and increased scrutiny of developers' financing.

To matching that, local governments should establish information systems on people's property ownership, which, coupled with the credit system, would help curb speculative house purchasing, Qi said.

On the supply side, more efforts will be made by both the central and local governments to ensure the availability of land and build more affordable, low-rent housing for low-income earners.

These have worked together in the past few weeks to cool off the sector, with property sales tumbling in many cities, reports said.

Hangzhou, capital of eastern Zhejiang province, saw a 72.55-percent month-on-month plunge in properties sold during the week ending April 25. Beijing witnessed a 45-percent fall in property sales, while in Shanghai the drop was 38 percent, according to China Index Research Institute.

Some developers, saddled with bank loans, have cut prices, which in turn wooed potential buyers.

EverGrande Real Estate is reportedly offering a 15-percent discount to push sales of apartments in one of its housing developments in Guangzhou, capital of Guangdong Province.

The measures could help stabilize home prices over a certain period of time, said Ren Zhiqiang, chairman of Huayuan Property.

However, the prices might show a "revenge" rally later this year as developers withdraw their investment, exacerbating the shortage of new properties, Ren said.

"Once property prices drop to desired levels or even further than expected, say with a panic fall, the government will change the policies," Ren said in his blog.

Real estate is important to China's economy, which is closely related to 60 sectors like cement, steel and home appliances, experts said.

As a dominant industry, it accounts for 18 percent of China's fixed-asset investment, and contributes about 57.9 percent of the nation's gross domestic product, reports said.

"The government just wanted to cool, not kill, the property market," said Andy Rothman, a China strategist with brokers CLSA in Shanghai.

Meanwhile, some questioned the efficiency of these measures.

"Many of my clients are cash buyers," said Beijing-based real estate agent Leng Hongli.

Starting this year, the number of first-time buyers applying for mortgages decreased sharply as they could no longer afford the prices, he said.

(China Daily May 8, 2010)