China Reinforces Ban on Housing Sales on Rural Land
A farmer carrying a rake walks down a dirt road past a replica of the Eiffel Tower at the Tianducheng development in Hangzhou, Zhejiang Province, in August, 2013 (Reuters).

China has deferred plans to relax controls on the sale of property built by farmers or village collectives on rural land, a move that will impact home buyers looking to escape escalating real estate prices in the mainland's top cities.

According to an Economic Information Daily report, the Ministry of Land and Resources and the Ministry of Housing and Urban-Rural Development have jointly issued a circular ordering a halt in the sale of "small-property-rights housing" built on rural land.

The paper quoted Xu Deming, a vice land minister, as saying that the recently concluded Communist Party plenum's decision to permit some rural land to enter a unified urban-rural land market was "on the premise of conforming to the planning and is under usage supervision."

Expectations that Beijing would relax controls on the sale of such property rose after Chinese leaders said the government would establish an exchange market for rural property rights transfers.

China's urban dwellers are not allowed to purchase rural homes with limited property rights, and such purchases are not legally guaranteed.

However, rising home prices in the mainland's cities have forced several people to invest in low-cost rural homes.

"A buying frenzy has occurred in some places amid hopes that such 'small-property-rights housing' could be legalised," the newspaper added.

China's home prices have risen despite government intervention aimed at cooling the property markets.

Data from the National Bureau of Statistics shows home prices increased by 21.4% on an annual basis in Shanghai in October, the highest among 70 major cities.

Home prices rose 21.2% in Beijing, 20.7% in Guangzhou and 20.6% in Shenzhen last month.

All land in China is still owned by the government.

Land in urban China can be freely traded.

Land in rural China is owned by collectives - villages and townships. Farmers only have the right to use it and both farmers and collectives are barred from selling rural land.