The Ministry of Construction yesterday denied reports that housing supply in some cities is insufficient, but admitted inconsistencies in the type of units available.
Data from 40 major cities shows that housing supply can satisfy normal market demand, said a ministry spokesman.
However, some cities have an oversupply of expensive apartments and a shortage of affordable housing.
At the end of April, the 40 cities had 1 million apartments with a total 120 million square metres on the market, of which only 12,000 units were smaller than 60 square metres.
As house prices in China are relatively high compared with incomes, people tend to buy small apartments, said the spokesman.
The ministry has instructed local planning departments to readjust the supply balance in favour of smaller apartments, and this is having an effect, he said.
Since 2004, the government has taken measures to stop the property market from 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 per cent.
Some warn of an impending "bubble" and urge tough measures to bring down the vacancy rate while others insist rising prices are a proper reflection of insufficient supply.
Source: China Daily