Home price rebounds create paradox for policies

Fan Gang, an economist and former advisor to China's central bank, said that considering contradictions between the country's limited land resources and a large population, the loose liquidity condition and the big gap between rich and poor, the government is unlikely to remove control over speculative purchases in the short term.

To get the country's real estate sector back on track, the government should quicken efforts in establishing a long-term mechanism that gives full play to the role of the real estate sector in facilitating the country's urbanization process, forum delegates said.

According to Zhu, such a development plan is likely to be unveiled in the next three months. The plan will not only adopt economic means such as taxation and credit policies to regulate the market, but will also create policies to improve the housing and land supply systems.

But the establishment of such a mechanism will take years, because the measures require a string of supporting reforms, he said.

The current control measures, most of which were administrative means, have been widely criticized for only temporarily reining in home prices, as drastic rebounds could arise once they are lifted.

Shen Jianguang, chief economist from Mizuho Securities, said that the transformation of the real estate sector is intertwined with China's economic restructuring, especially at a time when the manufacturing industry, a traditional backbone sector for the economy, was weighed by over-production.

"We should neither deny the role of the real estate sector in boosting its related industries and consumption, nor turn back to stimulate the sector. The government should combine its efforts of securing growth and popping the sector's bubbles," said Shen.

Shen said that the forthcoming mechanism, which will adopt a national property tax system designed to entrust local governments with more financial powers, will let the real estate industry support the economy's growth without accumulating bubbles.

"The implementation of the mechanism will help nurture the healthy development of the sector and reduce the uncertainties brought by administrative intervention. In that case, the miracle that China's house prices will never drop will end," Shen said.

The annual meeting of the forum, the 13th of its kind, has been serving as a platform for officials, experts and industry leaders to discuss the development of the country's real estate sector. The four-day meeting, which began on Tuesday, has attracted nearly 1,000 participants this year.