Beijing's city government has announced plans to build as many as 70,000 affordable homes that will be 30 per cent cheaper than surrounding properties.
Analysts said the move, part of a new round of cooling measures to check rising home prices, was designed to help low and middle-income families buy property after new home prices on the mainland last month registered the largest gain in almost three years.
Led by major cities, average new home prices rose in 69 of 70 cities from a year ago, the National Bureau of Statistics said on Tuesday.
Property consultants said other major cities such as Shanghai and Guangzhou were expected to follow Beijing's move.
"Home prices will not immediately go down as the measures do not target demand but focus on supply," said Zhang Dawei, a research director at the mainland division of property agency Centaline. "It will take a longer time to see the impact."
He said he expected the pace of price growth would slow.
Among seven measures released by Beijing's Municipal Commission of Housing and Urban-Rural Development, the city will provide land for at least 20,000 "self-use" homes by the end of this year. About 50,000 units are planned next year.
About 10,000 units are sold in Beijing every month, so the 70,000 self-use homes would increase supply by just under a third over two years.
The average unit price of self-use homes should be 30 per cent less than surrounding properties, Xinhua quoted the commission as saying.
Self-use homes are mainly smaller than 90 square metres and cannot be bigger than 140 square metres.
Families whose members are Beijing residents and do not own any flats are eligible to apply, and each household can only buy one self-use flat. They will not be able to resell the flat within five years and will not be allowed to buy another self-use unit.