SHENZHEN, China's first special economic zone which neighbors Hong Kong, now has the country's highest housing prices.

It was reported the average housing price of the city has reached 14,223 yuan (US$1,850) a square meter while the average price in the city's four major districts has surpassed 20,000 yuan.

Zhou Xu, a researcher in the city's government backed real estate research institution, said a government policy had led to an insufficient supply in the local housing market this year which resulted in a surging demand for a limited resource.

The central government last year issued a policy on May 29 ordering that new apartments with floor areas below 90 square meters should account for 70 percent of the total housing. However, most of the developers obtained the details of the policy from Shenzhen Government in September, which delayed their building any new apartments based on the new policy and caused a supply shortage in the first half of the year. This was responsible for the skyrocketing housing price, according to Zhou.

Li Yaozhi, general manager of the Shenzhen branch of the nation-wide chain real estate agency Centaline China, said totally 2.3 million square meters were sold in the first quarter, but the newly increased area only reached 1.4 million square meters, showing the large gap between the supply and demand as the major reason of the soaring prices.

Meanwhile, newly launched luxury houses also promoted the local real estate market to reach new highs, he added.