The increase in new home prices this year should be smaller than increases in the Shanghai's annual economic growth or local residents' incomes, the Shanghai government said last night, just a few days before a central government deadline.

It also said that more affordable homes should be built in Shanghai this year in comparison with "commodity houses" so as to ensure increasing coverage of the city's affordable housing programs. New homes excluding those built under the city's affordable housing programs are defined as commodity houses.

The State Council, or China's Cabinet, asked local governments across the country to disclose their annual targets for price control by the end of the first quarter.

"The annual target, which will cover both affordable homes and commodity houses, will actually be of little help in tapping the current problem of soaring housing prices which are mainly confined to the commodity housing market," said Song Huiyong, research head of Shanghai Centaline Property Consultants Ltd.

"It also seems to be a target that can be achieved without difficulty if more affordable homes, usually sold at much cheaper prices than commodity units, are also included for price calculations."

New homes, including those built under affordable housing programs, were sold for an average 14,213 yuan (US$2,163) per square meter in the city in 2010. The average price of new homes, which excluded those built under affordable programs, was 20,995 yuan per square meter during the same period, Shanghai Statistics Bureau said earlier.

Meanwhile, the city's gross domestic product rose 9.9 percent to 1.687 trillion yuan last year and the disposable income of local dwellers climbed 10.4 percent to 31,838 yuan during the same period, according to data released by the bureau.

"It came as no surprise to me that Shanghai also issued a target that connects home price growth with GDP and income rises, just as many of its counterparts already did over the past few weeks," said Sky Xue, an analyst with China Real Estate Information Corp. "However, a target of such kind will have little impact to bring down housing prices."

As of yesterday, nearly 40 cities across the country had announced their plans to control home prices and the majority of them chose to use GDP as well as residents' income growth as their major references. Shanghai is the first among the country's first-tier cities to announce such a target.

New homes in Shanghai sold at an average 20,625 yuan a square meter in February and remain well above 20,000 yuan per square meter for March, Shanghai Uwin Real Estate Information Services Co said.