The latest round of cooling measures this month is expected to slow down homebuying on the mainland after scorching sales in March.
Prices of new homes climbed in 68 out of 70 cities in March from February, according to figures released by the National Bureau of Statistics - the highest number of cities since September 2011.
In February, 66 cities recorded price gains.
Shanghai had the biggest month-on-month gain of 3.2 per cent. Year on year, prices rose 11.1 per cent in Guangzhou last month; 8.6 per cent in Beijing; and 6.4 per cent in Shanghai. Wenzhou saw the biggest drop, with prices tumbling 9.2 per cent.
Market watchers expect transactions to fall this month as soaring prices and strict enforcement of the 20 per cent capital gains tax coupled with the increase in down payment for second homes have dampened buying interest.
"But sales started to fall sharply when the so-called national five measures took effect on April 1," said Kenneth Pak Kei-yuen, a senior general manager at Midland Realty's Beijing office, referring to the new curbs.
Thirty-five cities announced additional property curbs after being directed by the central government to cool the real estate market. These curbs include strict enforcement of the capital gains tax and an increase in the down payment for second homes from 60 per cent to 70 per cent of the price.
The mortgage rate for second homes has also been set at 1.1 times the benchmark rate, while mortgage applications for such deals are now subject to stricter checks.
Just 2,000 units in the secondary market have changed hands in Beijing since April 1, compared with 20,000 deals during the same period last month.
Transactions rose to a record high last month in most cities as sellers rushed to register their sales with government agencies before the 20 per cent capital gains tax took effect on April 1.
But even though home sales have plunged this month, Pak said, prices had not retreated as owners were reluctant to sell their flats because of the heavy property tax.
"We still need to observe the impact of the latest round of cooling measures as it's just three weeks old," Pak said.
The five measures were introduced after residential presales value hit a record high of 1.2 trillion yuan (HK$1.5 trillion) in the first quarter, with the average selling price growing 20 per cent to 6,346 yuan per square metre.
Bocom International property analyst Alfred Lau said there were sharp price gains in Guangzhou, Beijing and Shanghai because prices in these cities were the first to fall after the austerity measures were introduced in 2010. "After two years of consolidation, prices started to rebound last year," he said.
Nomura Equity Research expects sales to slow slightly this month given the high base in March. "Although we see some upward pressure on home prices due to the shortage of saleable units following a period of red-hot sales, potential homebuyers may hesitate to buy at high prices in the current policy environment," it said.