Wealthiest man tells how to rein in rocketing house prices (2)

According to Zong, public housing could be offered to city residents in the following categories: young people who have just started work, who would be entitled to a unit of housing available at a rent of no more than 10 percent of their monthly salary; and people starting a family, who would entitled to a unit of public housing at a mortgage less than 20 percent of their monthly income.

Meanwhile, high-income earners would be able to purchase an unlimited number of homes, but be prevented from obtaining bank loans for this purpose.

"People who had previously purchased a house at a high price should get reasonable compensation," Zong added.

Ni Pengfei, director of the Urban and Property Research Center under the Chinese Academy of Social Sciences, said the chances of fully socializing the housing sector are slim as it is a major driving force of China's economy.

Investment in China's housing industry accounts for around half of the nation's total investment and is related to more than 20 industries in China.

"The key problem is that developers are hyping up the prospects of further house price rises, which triggers panic purchasing," Ni said.

The strong rebound in the property market since June 2012 led to a central government response on March 1 that targeted speculative property sellers.

Homeowners who sell their homes within five years of their purchase will face capital gains tax of 20 percent. Before the new measure, the tax levied was 1 percent of the sale price.

The measure targeting speculation, however, resulted in further price hikes in the new housing market, especially in key cities as buyers opted for new properties.

In February, of the 70 major cities monitored by the National Bureau of Statistics, 66 saw house prices rise month-on-month, compared to 53 in January.

"In the current property market in which demand outweighs supply, a tax on the transaction sector could only push up the house prices," said Ni Hongri, a research fellow with the Development Research Center under the State Council.

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