[Photo: baidu]

An official with the Ministry of Housing and Urban/Rural Construction is calling for the establishment of a national housing bank.

Zhang Qiguang, the head of the Housing Provident Fund Supervision Department of the housing ministry has said that it is high time to establish a policy-based financial institution to supervise housing.

Such an institution would gradually take over the current housing provident fund mechanism.

The proposed bank aims to offer low-interest-rate housing loans to help middle and low income families afford houses.

This could help to optimize the use of China's housing provident fund and stimulate the sluggish housing market in the long-term.

The property sector is still one of the key driving forces in Chinese economic growth.

Analysts say sudden market contraction may trigger problems related to overcapacity, debt defaults and so-called "shadow banking."

Last Monday, the Chinese central bank and two government bodies announced new minimum down payments for first and second home purchases.

These use the housing provident fund to offer urban residents lower rates than those of commercial banks, and aim to encourage housing purchases.