Reports that the supply of housing in some cities is not meeting demand were yesterday denied by the Ministry of Construction. But it admitted inconsistencies in the kind of homes being made available.

Data gathered from 40 major cities showed that housing supply could satisfy normal market demand, according to a ministry spokesman. However, some cities had an oversupply of expensive apartments and a shortage of affordable homes.

At the end of April, the 40 cities had 1 million apartments covering a total of 120 million square meters on the market. Of these only 12,000 were smaller than 60 square meters.

As house prices in China are relatively high when compared with incomes prospective buyers were normally interested in purchasing the smaller apartments, said the spokesman.

The ministry had instructed local planning departments to adjust the supply of homes in favor of smaller homes and this was having an effect, he added. .

Since 2004 the government had taken measures to stop the property market from overheating but  prices kept rising and investment continued to pour into the sector, the spokesman observed. 

Some warn of a looming property "bubble" and urge tough measures to reduce the vacancy rate while others insist rising prices are a realistic reflection of market supply and demand.

(China Daily May 15, 2006)