In a surprise move to improve Shanghai's competiveness, the mainland's most developed city has rolled out a controversial policy - reining in a real estate boom it blames for deterring foreign investment. City officials say they are serious about capping property price growth despite speculation national austerity measures will be eased to spur the sector amid the economic slowdown. "We must be fully aware of the task of controlling the property market and stand firm against a property bubble. We can't blindly follow others' steps in making real estate policies," Shanghai Communist Party boss Han Zheng told a government conference. "If we fail to control the property market, the whole city's competitiveness will be dented," he added. Shanghai officials believe high property prices have become a stumbling block to its rise as an international metropolis because expensive flats - 5 million yuan (HK$6.1 million) for a two-bedroom home in the city centre is not unusual - are deterring workers from living there. Han's remarks sparked fears the city would veer off the road to recovery as real estate has long been its economic backbone. READ MORE: Shanghai’s month-on-month gain in existing home price picks up to fastest in at least 22 months Rising home prices have also boosted residents' personal net worth. Developers and analysts believe Shanghai will use administrative measures to help developers reduce costs for homebuyers, charge higher taxes to owners selling properties to reduce the number of transactions, and order developers to build fewer high-cost homes. Falling overseas and domestic demand and Shanghai's efforts to eschew big infrastructure projects while transforming itself into a global financial and shipping centre have dragged on the city's growth in recent years, harming its status as the mainland's economic engine. Han did not elaborate on what measures the city would take to curb property prices. But analysts doubted any such policies would succeed, pointing out that Hong Kong remained the world's most expensive city for homes, despite government efforts to curb prices. If we fail to control the property market, the whole city's competitiveness will be dented Shanghai Communist Party boss Han Zheng According to Tospur Real Estate Consultancy, home prices in Shanghai jumped 18.2 per cent to 31,337 yuan per square metre in the first nine months of this year. More than 10 million square metres of housing changed hands in the same period, a jump of 64 per cent year on year. A high-end flat in a prime location can fetch more than 100,000 yuan per square metre - more than an average wage earner's yearly income. "It has to be a structural adjustment rather than a heavy-handed crackdown," said Joe Zhou, head of research in Shanghai for global property consultancy JLL. "An ideal way of controlling the market is to increase the land supply to allow more affordable housing for needy residents, which could dent the overall elevated housing prices in the city." Efforts over the past two decades by the local government to cap rising property prices have had little effect as demand is so high. Shanghai's latest stance is in contrast to most local governments, who have pinned hopes on property prices to bolster their economies. "The policy is a fresh sign that the top Shanghai boss is playing a political game since he is a contender for a seat on the Politburo Standing Committee," said Eric Han, a local entrepreneur. "He wants to show the bosses in Beijing his ability to lead the city well."