China's battle against high home prices is at a critical stage and property curbs should not be eased until a more effective mechanism to reduce home prices to reasonable levels could be worked out, the State Information Center said in a report published yesterday.

The new mechanism must have a long-lasting impact on the housing market and should focus mainly on implementation of property-related taxes, the SIC, a government think tank, was quoted by the China Securities Journal as saying.

While cutting taxes on transactions, taxes on home ownership should be raised to curb speculative demand, which has been largely blamed for soaring home prices in the country, especially over the last few years, the SIC said.

China should also consolidate its current property-related taxes. There are now 10 different types of taxes on property transactions in China, but only two taxes for home ownership, the think tank noted.

To bring down home prices, China should also set up a fair system for land auctions, property investment and financing, it said.

Despite the latest round of harsh steps to cool the overheated property market, which include increased down payment and mortgage rates for second homes and home purchase curbs in about 40 cities across the country, prices still remain very high compared with what they were at the end of 2009, the SIC said.

It sees a long road before prices can be at reasonable levels.