Housing prices in Chinese cities will continue to rise in the third quarter this year despite government pledges to make housing more affordable for low-income families, according to a recent report from an industry group.

The booming Chinese economy, people's rising incomes and excessive liquidity will keep the housing demand strong in the latter half of the year, a research group under the All-China Federation of Industry and Commerce (ACFIC) said.

Zhu Zhongyi, vice president of the China Real Estate Association, said earlier this month, "It is the disparity between tight supply and overheating demand that has pushed the prices up."

However, a sharp increase in land purchase by real estate developers in the second quarter would boost market supply over the next one or two years, helping alleviate the upward pressure on housing prices, said the report.

Investment by real estate developers continued to expand in the second quarter, with the growth rate 2.73 percentage points higher than the same period of last year and 2.51 percentage points higher than the first quarter.

Government efforts to adjust the housing market structure have been paying off since the beginning of 2007, said the report.

In the first six months, 23.7 percent of real estate investment went into the construction of affordable apartments no bigger than 90 square meters, while villas and high-end apartments absorbed 10 percent of the investment, down from 11.98 percent in January and February.

Housing prices in 70 major Chinese cities were up a record 7.5 percent in July from the same month last year, according to figures from the National Bureau of Statistics (NBS). The rise was 0.4 percentage points higher than the figure of June.

Beihai, Shenzhen and Nanning saw the highest price hikes at 18.6 percent, 16.1 percent and 12 percent respectively.

(Xinhua News Agency August 22, 2007)