Array

BEIJING, Mar 25 (Reuters) Housing prices in Beijing jumped in the first two months of 2006, but sales volumes fell as as consumers waited to see if Chinese government price controls would work, state-run media reported on Saturday.

The official China Daily reported that average housing prices in Beijing rose about 1,000 yuan ($124.6) per square metre in the first two months of 2006, an increase of 17.3 per cent on the same period last year, according to the Beijing Municipal Construction Committee.

Housing in the Chinese capital now costs an average 6,776 yuan per square metre, and continued rises are likely in major Chinese cities despite central government efforts to make housing more affordable, the paper said.

Last year, the Chinese government issued a package of measures to curb soaring property prices and investment. The steps included capital gains taxes on homes resold within a short period, higher mortgage rates, and increased down-payment requirements.

The latest price rises in Beijing indicated a slight slowing on last year's, when average prices there rose 19.9 per cent for the whole year, according to previous estimates from the Construction Committee.

But the rises appear to be deterring potential buyers. The Construction Committee said that in the first two months of 2006, 1.17 million square metres of commercial housing were sold in Beijing, a fall of 24.5 per cent on the volume over the same time last year.

''The prices are much higher than many people can afford,'' the paper said, noting that average per capita income in Beijing in 2005 was 17,653 yuan.

''Speculation by real estate developers in connivance with some local governments has helped house prices to keep rising,'' it said, citing Zhang Qunqun, an expert at the Chinese Academy of Social Sciences, a government thinktank. ($1=8.0277 Yuan) REUTERS SD RN1436