Although housing prices posted their first month-on-month decline since 2005 in China, they are not expected to fall dramatically like 20 percent or 30 percent, economists said at a forum over the weekend.

The government, which has strictly regulated the property sector in the past three years, should implement positive measures such as canceling land-related taxes to boost transaction volume and help capital-strapped developers, analysts said.

''Without (boosting) transaction volume, it's meaningless to say anything. That's the No. 1 issue that has to be dealt with,'' said Nie Meisheng, chairwoman of the China Commercial Real Estate Commission.

In Shanghai and Beijing, the transaction volume has dropped by half or even more, Nie said at the Operation and Management Innovation Summit 2008.

The average housing prices in 70 Chinese mainland cities fell 0.1 percent last month from July. Prices of new homes also dipped 0.1 percent in August from the month before, according to the National Development and Reform Commission, the nation's top economic planner.

The year-on-year increase in the mainland average property prices in August was 5.3 percent, the slowest pace in 18 months. The growth has slowed for seven straight months from a record high of 11.3 percent in January, according to the commission.

China's property market has been plagued by a steep drop in transaction volumes this year after the government raised minimum down payment requirements and hiked interest rates for home owners who hold more than one mortgage.

Now is the time for the regulator to abolish some taxes, such as the land-appreciation tax and tax charged by local authorities, according to Ba Shusong, a deputy director of the State Council's Development and Research Center.

For example, it's too heavy a burden for a home buyer to pay all kinds of property-related taxes totaling 2,000 yuan (US$293), Ba said, considering in some cities, homes sell for 4,000 yuan per square meter.

He added that some property firms, which bought land at a high cost last year, will face pressure in their capital flow this year.

(Shanghai Daily September 22, 2008)