China has launched a campaign to bring down real estate prices that raise fears of a speculative housing bubble. The measures used by the government include tax and other steps that are aimed at providing a supply of affordable homes for the population.

A notice by the State Council has urged local authorities to focus on the provision of affordable housing. The government is afraid that too much money goes into the construction of upscale and commercial real estate.

Now property prices are 12.5% above their last-year levels. The increase amounted to 14.4% in 2004. Shanghai had the "most shocking housing prices in China," report government news agency Xinhua, as tje average cost per square meter is over 10,000 yuan ($1,200).

Now many poor Chinese families that received housing due to recent Housing Reforms are not able to buy new property now. The proportion of affordable housing has declined to 4.6% last year from 6% in 2003.