China's Ministry of Construction on Sunday denied reports that housing supply in some cities is insufficient, but admitted inconsistencies in the type of housing available.
Statistics from 40 major cities showed the housing supply can satisfy normal market demand, said a ministry spokesman.
However, some cities have an oversupply of expensive apartments and a shortage of cheaper, affordable apartments.
At the end of April, the 40 cities had 1 million apartments with a total 120 million square meters on the market, of which just 12,000 apartments were smaller than 60 square meters.
As house prices in China are relatively high compared with incomes, people tended to buy small apartments, said the spokesman.
The Ministry of Construction has instructed local planning departments to readjust the supply balance in favor of smaller apartments, and this is having an effect, he said.
Since 2004, the government has taken measures to stop the property market overheating, but prices have kept rising and investment is still pouring into the sector, he said.
Analysts are divided as to how serious the problem is with some holding that the vacancy rate is at a highly dangerous level of 26 percent. They have warned of an impending economic "bubble" and called for stern measures to bring down the vacancy rate.
Others, however, insist the vacancy rate is less than one percent, and that rising house prices are a correct reflection of insufficient supply.