Compared with the same period last year, the average housing price in 70 Chinese cities in May had increased by 5.8 percent, which is 0.2 percentage points higher than April this year, according to survey results released by the National Development and Reform Commission and the National Bureau of Statistics Wednesday.

The five cities with the fastest housing price increases are Dalian in Liaoning, Shenzhen in Guangdong, Hohhot in Inner Mongolia, Fuzhou in Fujian and the capital Beijing. Prices for the first four cities have risen around 10 percent while in Beijing the figure is 9 percent. There are 25 cities where house prices have gone up by over 1 percent.

However, in Shanghai, the average housing price has fallen by 2.9 percent and the price of commercial property has dropped by 6.2 percent compared with prices in the same period last year.

The price of older properties in Dalian, Shenzhen, Zhengzhou in Henan and Hohhot has gone up by 10 percent. In 34 other cities increases have also been over 1 percent.

On May 29 China's State Council issued a new circular aiming to increase the supply of affordable housing in a bid to bring down the soaring house prices.

The circular, produced by the Ministry of Construction, the National Development and Reform Commission and seven other departments, states all local governments must include the building of affordable homes in their 11th five-year development plan (2006-2010).

According to the circular all developers must fund 35 percent of the investment for the development of any project from their own capital before they can seek loans from commercial banks.

The circular also aims at reducing demand, urging local authorities to exercise restraint in demolishing old homes, which forces tens of thousands of people into the housing market every year.

The circular warns the developers engaged in hoarding property or any other malpractice of a tough approach to them. Serious offenders would be fined or even have their licenses revoked, it states.

(China.org.cn Wang Ke June 15, 2006)