China is expected to adopt new housing policies by the end of the month to favour middle- and low-income urban residents, officials and insiders said over the weekend.

One important adjustment is to divide current affordable apartments into two types: those for sale and those for rent. This will create the backbone of the nation's housing guarantee system in the future, said an official with the Ministry of Construction.

Different from past policies, cities will be encouraged to construct and lease out "low-cost houses" forminimum earners, officials said. Moreover, local governments will provide certain allowances for these tenants on rental fees.

The remarks were the latest steps in regulating the real estate market.

On May 29, nine cabinet departments jointly issued an announcement to curb the property price hikes in many cities, reports said.

"Cities at all levels must work out concrete plans on housing construction before the end of September," it said.

"Because China is a populous nation, it is unrealistic to help each person purchase an apartment of his/her own," said Fang Mingli, a real estate entrepreneur in Beijing.

By building low-cost houses, the nation will handle the problem of the large-number of urban people who cannot afford to buy a new house, he noted.

One controversial issue forreal estate developersand insiders is that small apartments no bigger than 90 square metres must now account for 70 per cent of new homes being built.

"Low-priced apartments are welcomed by the mass of people who participate in the distribution of social resources by purchasing new houses," said Meng Xiaosu, who is chairman of China Real Estate Development (Group). But "the small size is just the eye-catching part of the problem."

Nowadays, the proportion of investment intoeconomically affordable housingonly accounts for 5 per cent of the total, which is far short of the increasing demand for new houses from middle- and low-income families, Meng said.

"The ideal proportion of economically affordable apartments in China's real estate market should surpass 30 per cent," he suggested.