ZHU Jian, one of the organizers of the co-operative housebuilding project, said he is just one of the many ordinary middle-income citizens to find Shanghai housing prices unaffordable.

Recent statistics may convince Zhu that he was right in starting his project, as housing prices in Shanghai continued to grow at a rapid pace in February, usually a slow season for property sales.

The benchmark Shanghai Existing Housing Index, which tracks both the sales volume and prices, climbed 30 points to 1,429 in February, an increase of 2.1 per cent. The index climbed 4.1 per cent in the first two months of the year. About 36 per cent of the 100 sampled buildings experienced a price hike in February, the largest of which reached 3,000 yuan (US$362.80) per square metre.

"It will take a few more months for the new measure adopted by the government to take effect," said Chen Cheng, director of the Existing Housing Index Office.

Local authorities last week introduced a 5.55 per cent business tax on transactions in apartments held for less than a year, which is probably the first of a series of measures to curb speculation in the property sector.

Some analysts say the impact of the new tax would be limited, as the shortage in land supply - the decisive factor for Shanghai's housing prices - still remains. (Star News)