After seven government departments issued a joint circular this month in an attempt to stabilize housing prices, Shanghai and Hangzhou, the cities that experienced the most dramatic price hikes, have seen prices tumble by more than five percent.

But not so in Beijing. The per-square-meter sales price in a recent Beijing housing exhibition averaged 9,512 yuan (US$1,146). In 2004, the average was 5,005 yuan (US$604.724) per square meter, according to figures from the Beijing Municipality.

Beijing's housing prices are unlikely to be affected greatly by the new policy, said Yang Qing, board secretary of the Beijing Real Estate Development Company.

"Rates of increase might slow down, but housing prices will not drop in the near future," said Yang.

Many new houses are still being sold like hot cakes in Beijing, Yang said.

According to the new policy, owners of private property who sell after less than two years after purchase must pay business taxes calculated according to the sale price. The policy also states that local real estate administration departments must demand information on price levels and housing sizes before developers are granted permission for land use, using reducing construction costs for affordable housing and restricting developers' profits to three percent as guidelines.

Yang and other insiders attributed the maintenance of Beijing's increasing housing prices to the huge demand for real estate products, as well as a supply shortage.

In the first four months of this year, only 7.3 million square meters of land for housing development was made available on the market, a 30 percent decrease from the same period last year, said Duan Meiyan, general manager of the Beijing Dadi Real Estate Consulting Company.

Beijing is home to the country's largest number of civil servants, foreign-related agency staff, white-collar workers, college professors, researchers and artists in the country. This has led to the enormous demand for new houses and corresponding price hikes, said Professor Dong Fan with the Beijing Normal University.

Compared with Shanghai, Beijing's housing prices have been stable for a long time. The city has also had much less of a problem with real estate speculation, said Professor Lin Zengjie with the Renmin University of China.

In Shanghai, the average per square meter price in urban and suburban areas exceeded 10,000 yuan (US$1,207.7) in 2004. Prices of some residential apartments also increased 20 percent in a matter of months. By comparison, housing prices in Beijing stood relatively firm at about 5,000 yuan per square meter last year.

Lin also attributed the property price hikes in Beijing to the high rates of profit claimed by real estate developers, which averages 15 percent. In some other countries, profits are restricted to 5 percent, Lin said.

Despite macro-control measures by the central government, real estate pundits are still some of the richest persons in the country.

Ninety-four of the 500 richest people in China are in the real estate business, according to the Guangdong-based New Fortune magazine.

Although China has implement a new policy to stabilize housing prices, the country's housing prices are still expected to grow 5 to 8 percent this year, and Beijing's growth rate might exceed 8 percent, Professor Dong said.

(Xinhua News Agency May 26, 2005)