Beijing may take further action to cool the mainland property market if home prices in major cities grow by as much as 10 per cent in the first half of this year, say analysts.
The caution comes as demand and price growth continues an acceleration that got under way in November last year and shows little sign of easing.
Data from the China Index Academy, a unit of SouFun Holdings, the mainland's biggest real estate website operator, shows that the average price of a new home in 100 major cities recorded an eighth successive month-on-month rise in January, to 9,812 yuan (HK$12,190) per square metre, up 0.03 per cent from December.
Quicker growth was recorded in the larger cities. In Beijing, the average price of a flat stood at 25,075 yuan per square metre last month, up 2.27 per cent from December. In Shanghai, the average price was 2.3 per cent higher at 27,655 yuan per square metre. In Guangzhou, the price rose 2.14 per cent, and in Shenzhen, it climbed 2.18 per cent.
But despite their recent surge, prices rose by about 10 per cent the whole of last year, which Sherman Lai Ming-kai, the chairman of Centaline Property Agency, described as "acceptable".
If home prices rose about 10 per cent annually, the government was unlikely to adopt new cooling measures for the market while gross domestic product growth was strong, Lai said.
The mainland's GDP grew 7.8 per cent last year to 51.9 trillion yuan and some analysts have predicted growth could exceed 8 per cent this year.
"But if prices rise too fast, such as an accumulated growth of 10 per cent or more within the first six months of this year, leaders will be concerned that prices will rise too fast for the whole year. Then they may consider more tightening measures," Lai said.
However, even in such a scenario, no drastic measures were likely, analysts added. Rather, a more stringent implementation of existing home purchase restrictions, a reduction in the mortgage loan discount for first home purchases, or tightened lending for second purchases would be implemented.
Mortgage rates are offered at a 10 to 15 per cent discount for first-home buyers.
Analysts see little possibility of policy changes during the first quarter, largely because of leadership changes taking place in local governments and state bodies across the country.
The focus of two upcoming annual conventions - the National People's Congress and the Chinese People's Political Consultative Conference - was unlikely to be on austerity measures, said Macquarie Securities in a report.
Leaders were likely to focus during the second quarter on details of the 10-year urbanisation plan, including the role of real estate, it said.