Just one year ago, the State Council announced new regulatory plans to stabilize property prices in major cities and rein in housing speculation but without success, indicating insufficient supply and robust inelastic demand are still pivotal forces in the market, according to analysts.

Keeping the lid on housing prices

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The new housing regulations announced a year ago contained five points: improving the accountability system for local officials in implementing home price stabilization work, firmly reining in speculative activity in home purchases, increasing common commercial properties and land supply, accelerating planning and construction of affordable housing projects and, finally, beefing up market supervision and regulation.

Although local officials were told to work out and announce their plans to control new-home prices, and warned that their performance in implementing the task will be evaluated, property prices in most major cities defied these efforts and continued to spiral up.

According to the so-called New Five-point Regulations, the State Council, asked all provincial capitals except Lhasa in the Tibet autonomous region to set a target to control local home prices.

However, in a statistical pool of 70 major Chinese cities, on a yearly basis, all cities apart from Wenzhou reported gains in new-home prices in December 2013, according to the National Bureau of Statistics.

First-tier cities continued to lead the rise in December, with the prices of new homes in Beijing and Shanghai surging more than 20 percent from a year ago.

That means local governments' plans to either keep property prices stable or make sure the surge in new home prices won't exceed that of local disposable income have failed.

According to Gu Yunchang, vice-president of the China Real Estate Research Association, the key to reversing excessive home price rises in the past decade was to increase supplies of land and affordable homes.

"We should let market forces play a more decisive role, with the government focusing on offering more subsidized housing in helping the poor," said Gu.

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