Beijing's relaxation of monetary policy and its encouragement of flat purchases by first-time buyers lifted average property prices across 100 major mainland cities for a second month.
The increase in prices has not been officially welcomed, however. Premier Wen Jiabao said on Tuesday that the country would 'unswervingly' implement property controls and prevent home prices from rebounding, according to Xinhua.
'The property price rise was due to the relaxation in monetary policy,' Credit Suisse research analyst Du Jinsong said. 'We believe property prices will continue to rise.'
The average price of new homes in the 100 mainland cities tracked by China Index Academy rose 0.33 per cent to 8,717 yuan (HK$10,610) per square metre last month. The increase was higher than the 0.05 per cent in June.
The research showed that the rebound in prices extended to more cities: 70 out of the 100 cities recorded property price increases last month, compared with only 45 cities in June. Only 30 cities recorded a fall in property prices last month, against 55 cities the previous month.
The academy believes the property market has benefited from interest rate cuts by the People's Bank of China, which has encouraged first-time buyers and others to buy flats. That led to increased sales of mass residential property.
Some high-end residential projects also attracted buyers, and developers have started to raise asking prices and cancel discounts.
The strong sales of high-end residential property helped boost the average price of homes in the 100 cities. General sentiment has also improved recently across the market. China Vanke bought a commercial and residential site yesterday in Shanghai's Minhang district for 2.03 billion yuan, or 11,395 yuan per square metre.
The 112,864 sq metre site in the district's Hongqiao area could yield a residential floor area of 105,596 sq metres and a commercial floor area of 25,464 sq metres.
Du said that under the current monetary policy, property prices would definitely continue to rise.
'The government is unlikely to release new cooling measures in the property market,' Du said.
Despite the fact that new housing supply is expected to increase in the next few months, he believes the upward trend of property prices will continue.
However, David Ji Yanxun, co-head of research at property consultant DTZ, said he believed that the central government would release new cooling measures for the property market.
'Property prices have already gone up, even though the government has yet to relax the controls,' Ji said. 'It is not what the government wants to see. They are worried that property prices would rise even faster if they relaxed the measures.
'I don't think they will relax the measures. The growth in property prices is not sustainable, and I think price growth will slow in the next few months.'
Number of mainland cities, out of 100 studied, that reported property price rises last month, compared with 45 in June