Beijing yesterday instructed local governments to make subsidized rental accommodation available across the country for poor families by the end of 2010 as rising housing prices show no sign of abating.

The statement by the State Council is the latest effort by the central government to increase the supply of affordable housing and to slow the rise in property prices.

Local governments must either subsidize rents for low-income families or offer them low-rent apartments, the State Council said in a circular.

A low-rent system is a major way to alleviate the housing problem of urban low-income families, the circular said.

By the end of this year, the system will cover people living on the minimum allowance in all cities.

The scheme will cover all poor families in the prosperous eastern regions by the end of 2008 and be extended nationwide by the end of 2010.

The circular also called for improving the economically affordable housing system and boosting the renovation of shanty areas within cities.

Analysts said a noticeable feature of the circular is that it targets "urban low-income families", which shows more attention is now being paid to this group.

The National Development and Reform Commission said yesterday that housing prices of 70 large and medium-sized cities in the country saw a year-on-year increase of 6.3 percent in the second quarter this year.

Shenzhen led with a 14.3 percent increase, followed by Beihai and Beijing.

The State Council ordered local governments to fund the low-rent program by setting aside more than 10 percent of revenues they raise from land sales.

It said China needed to curb "overly fast rises in real estate prices".

The China Security News quoted Jin Yiping, deputy director of the housing and property industry department of the Ministry of Construction, as saying that there are about 4 million people, living on the minimum allowance, who have housing problems. If the number included low-income families, it would be 10 million.

Families to be included in the low-rent system will be decided by local governments with reference to per capita discretionary income and housing standards.

The circular also tightens management of the economically affordable housing system, a policy to provide fairly cheap houses with government subsidizes.

The size of such houses should be about 60 sq m, and cannot be resold within a five-year period. Local government will have first purchase priority.

The circular also called for a speed up in the renovation of urban shanties to ensure shelter for the poor and floating population.

James Jao, chief executive officer of J.A.O. Design International Architects & Planners Ltd, said the circular was a "positive move" as it "actively resolves housing difficulties".

"Government intervention is imperative to provide housing, especially for the poor," he said.

He suggested the establishment of a special government organ to deal exclusively with housing problems.

Zhao Xiao, an economist with the University of Science and Technology Beijing, said construction of a large number of low-rent houses implies an "unbalanced income distribution system", which should also be addressed.

(China Daily August 14, 2007)