At a time when most homebuyers can only rely on their own feelings to size up the pricing trends, government efforts to check price manipulation by real estate developers are needed more than ever.

However, it is a clumsy decision to make sale suspension a punishment for developers who use various means to mislead purchasers.

The Beijing Construction Committee recently issued a regulation that will start from next month. It stipulates that property developers spreading deceptive information on price and sale progress to drum up bidding wars among buyers will not be allowed to sell new houses for at least one month.

Ostensibly, the new rule comes as one of the local government's responses to increasingly loud public complaints against rocketing housing prices.

Though the National Bureau of Statistics insisted that the rise of Beijing's housing prices was as mild as 7 percent in the first quarter of this year, local officials claimed housing prices actually jumped more than 14 percent.

While the masses were left totally confused, some real estate developers have taken advantage of the situation to fuel panic among anxious house buyers. Rumours of more and sharper price hikes were flying in the market. Numbers of unsold houses were deliberately distorted to create a false sense of short supply.

Local construction authorities have identified such frauds and have decided to react now. But they bumbled in delivering the blow.

The punishment of sale suspension authorities adopted to daunt unethical property developers amounts to only slap on the wrist, even if it can cause substantial losses to the latter.

Unfortunately, as the property boom continues, suspended sales might actually add to developers' profits.

If local officials' diagnosis of the housing price trend is close to the reality, delaying sales for months will enable developers to reap more from continuous price hikes.

Even worse, suspending house sales at present could aggravate the problem that it aimed to answer.

Local officials were first alerted to property developers' misdeeds when they found nearly two-thirds of unfinished houses ready for pre-sale were unsold. The developers had apparently done this to stoke panic among buyers.

Some developers have hoarded new houses to reduce supply and, in turn, shoot up prices.

If these new houses were officially banned from sale as punishment for developers, the real cost would more than likely fall on homebuyers who have no choice but to face a market further tilting in favour of the supply side.

It is necessary to stop all kinds of cheating surrounding housing sales. But it should not be done at the expense of homebuyers.

When making use of their administrative leverage over real estate developers, local construction authorities should not ignore the basic market rule of supply and demand. Otherwise, a goodwill policy could turn out to add fuel to the flames.

(China Daily May 12, 2006)