Beijing's municipal government is to introduce a bidding system for the contracts to build affordable homes in the capital.

On Tuesday, the Beijing construction commission and Beijing land and resources bureau said that construction firms would be invited to tender for the rights to build a range of low-cost properties in the Songjiazhuang residential area of Fengtai District.

While full details of the bidding process were not provided, the government said it had fixed a ceiling price for each property at 4,500 yuan ($580) per sq m.

City officials said the bidding system was being introduced in an effort to improve the quality of homes in the city and also to bring down prices, Beijing Youth Daily reported.

Property prices in Beijing have rocketed in recent years. According to a website affiliated with the commission, more than half of all the new apartments sold last August were priced in excess of 9,000 yuan per sq m.

The new homes, which will have a maximum floor area of 90 sq m, are targeted at medium and low-income families.

An Jiasheng, director of the beijing land and resources bureau, said the majority of the new properties would be two-bedroom apartments of about 70 sq m.

More than 4,250 affordable homes are to be built in Songjiazhuang, comprising 3,600 houses and 650 apartments.

In its Housing Construction Plan for 2006-10, the capital's municipal government said it would build 110,000 affordable homes with a combined floor space of 8 million sq m before the end of next year.

The cost of living in Beijing has been steadily rising over recent years, with spending on housing being the major contributor.

A recent survey by the beijing statistics bureau showed that in 2006, people in the capital spent an average of 1,213 yuan ($155.51) on housing - including payments for water, electricity and gas - twice the figure recorded in 2000.

The average annual income last year was 19,978 yuan ($2,561.28) last year, up 13.2 percent on 2005.

Yu Xiuqin, a spokesperson for the Beijing Statistics Bureau, said that despite the fact that house prices had been steadily rising, it was now time for a gradual decline.

"The rise is more a result of manipulation by property developers than a true reflection of the market," he told Beijing News.

"The demand for houses will be met gradually," Yu said.

In 2006, Beijing's municipal government released 1,318 hectares of land for housing developments, up 49.7 percent on the year before. It also introduced a series of tax measures to prevent speculation in the real estate market.