The average nationwide cost of housing during the January-August period climbed to 2,749 yuan per square meter, according to a real estate market report released by the Ministry of Construction on Monday. The figure is up 13.5 percent year-on-year and has climbed 6.9 percent from the first quarter of this year.

Officials from the ministry said the main reason for surging prices is an imbalanced mix of housing on the market, notably a reduced supply of economy housing.

From January to August, although investment in economy housing edged up 4.4 percent year-on-year, its proportion to total real estate investment dropped from 6.2 percent to 5.0 percent. The decline was even sharper in some locations.

Additionally, in some areas improper advertising by developers and the media have created spikes in housing prices.

Surging prices of land and construction materials are also putting upward pressure on the cost of finished homes.

In response, the ministry is urging all local governments to make adjustments to the market by increasing the supply of more affordable housing.

The ministry will also tighten supervision of all local governments in the control of land supply while taking steps to cut investment in non-dwelling and luxury houses. It intends to increase land allocations for lower-cost housing.

The ministry will also provide investment guidance to homebuyers.

(Xinhua News Agency September 21, 2004)