China is to attempt to curb its high-flying property prices mainly using economic measures, rather than administrative ones, said Minister of Housing and Urban-rural Construction Jiang Weixin in Beijing on Sunday.

China should increase the supply of cheaper and smaller apartments, said Jiang at the China Development Forum 2008.

"Apart from increasing supplies, psychological factors are also in play. Many people buy houses to speculate, which pushes up prices. It is not a simple issue of supply and demand balances," Jiang said.

The central and local government have been using mainly economic measures to keep down the price, as rising housing prices are adding to the financial pressures on Chinese families, said Jiang.

The Chinese central bank, the People's Bank of China (PBOC), ordered commercial banks to raise mortgage deposits to at least 40 percent for homebuyers who intend to buy a second apartment last year.

The PBOC has raised the reserve requirements 12 times and the interest rates six times since last year, which could cut finance available to many companies, including property developers.

The most recent one is on Tuesday, when the deposit reserve requirement ratio of commercial banks was raised to a record high of 15.5 percent as of March 25, the second such move this year.

The top economic planner, the National Development and Reform Commission, said that housing prices were rising at a slower pace as macroeconomic tightening policies had begun to pay off in November.

The average housing price in China's 70 large and medium-sized cities climbed 10.9 percent in February over the same month last year, 0.4 percentage points lower than in January.

(Xinhua News Agency March 24, 2008)