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China plans to restructure shanty towns in the country and clear up idle land to increase land supply, in the latest efforts to add more affordable housing for low-income families, government officials said yesterday.

"We are striving to finish the restructuring of shanty towns within five years," said Qi Ji, vice-minister of housing and urban-rural development. "In some areas, this job will be finished within three years."

The move is part of the government's real estate package to curb soaring property prices and crack down on speculation.

"As the government doesn't need to allocate more land to reshuffle shanty towns, it is an efficient way to address housing problems for low-income families," Qi said.

Currently, there are more than 10 million families living in shanty towns in the country.

To finance this transformation, the Ministry of Finance will also offer a number of favorable policies, such as the exemption of land use fees, stamp tax and contract tax, according to Wang Bao'an, assistant minister of the Ministry of Finance.

Meanwhile, the Ministry of Land and Resources will also quicken the process of clearing up idle land. By the end of last year, about 10,000 hectare lands was left unused.

Yu Xiaosu, vice-minister of land and resources, promised to let these parcels of land enter the market this month.

"By the end of 2009, property developers still have 200,000 hectares of land on hand, which should be enough for housing development in the next two to three years. And we also have 220,000 hectares of land reserves that could be used to increase the supply and rein in property prices," Yu said.

These measures, according to Qin Xiaomei, chief researcher with Jones Lang LaSalle Beijing, will definitely help stabilize property prices.

"But I don't think the real estate prices in Beijing will drop this year because of robust demand, high land cost and improved infrastructure," said Qin.

Nie Meisheng, director of China Real Estate Chamber of Commerce, held a similar view.

"The transaction volume may drop after those tightening policies, the price may remain firm as property developers have lots of cash on hand and they will probably take a wait-and-see attitude," said Nie.