Analysts worried about real-estate bubble in Shanghai

Property prices continue to soar at a record-setting rate in China's largest city, Shanghai, despite recent government efforts to cool the overheating market, state press reported yesterday.

Last month, housing prices jumped by the fastest rate in eight years, setting a record high with the city's Housing Index rising 4.5 percent to 1,045 points, reports cited a government study as showing.

Despite warnings from anal-ysts and official policies meant to curb bullish prices, the property index has surged 18 percent during the first seven months of the year, the Jiefang Daily said.

The monthly government report showed that, on average, low-end housing now costs 5,000 yuan (US$600) per square meter, up from 4,000 yuan.

At the other end of the market, residential property prices worth over 7,000 yuan per square meter shot up in the first six months by 172 percent annually. Property valued at under 3,000 yuan per square meter dropped 5 percent.

Worries that another real estate bubble is on the rise, following the city's last property glut in the 1990s, have jolted officials into action.

In June, the People's Bank of China asked domestic banks to tighten controls on mortgages for luxury housing to developers.

A spate of property-related corruption scandals in the city this year has prompted the government to review all major deals dating back two years. And this week, the city announced plans to stimulate demand in the millions of empty square meters of low-income housing to help prevent the expanding bubble.

Yet so far, spiralling prices have flaunted official attempts to take the steam off the market.