Mainland home prices saw a larger than expected year-on-year growth in the first two months of the year, raising concerns about further tightening measures.
As of last month, the national average home price hit a record high of 6,637 yuan (HK$8,229) per square metre, an increase of 21 per cent year-on-year, according to data from the National Bureau of Statistics.
"It is mainly due to unleashed pent-up demand, especially in tier-one or two cities; improved buyer's sentiment when policy was less a concern as compared to last year; and an easing credit environment," said a report by the global investment banking firm Jefferies.
Given the impact of the central government's "New National Five Measures", Jefferies expects transaction-volume growth to be moderate in the coming months.
In the first two months, national residential sales soared 87 per cent year-on-year to 630 billion yuan, according to the statistics bureau. Gross floor area of 95 million square metres was sold, up 55 per cent from a year earlier.
Three ministries are preparing the detailed implementation guidelines of the new policy, which aims to curb investment and speculation growth while supporting end-user demand.
The report cited examples of cities like Wuhan and Changsha, which have tightened housing provident fund policy by cutting loan quotas and raising application thresholds.
"Given record-high average selling prices reported, we expect the market direction to continue to skew due to concerns of more tightening measures," it said.
Nomura Equity Research said in its report that developers had increased construction, showing their optimism for housing-market prospects this year.
"Nevertheless, considering that the government is tolerant of slower fixed-asset investment growth, the strong start for real-estate investment will likely mean there is some room for further tightening," the report said.
For the first two months, real-estate investment also rose 23 per cent year-on-year, reaching its highest level since last March.