New home prices on the mainland jumped in July by the most since December as buyers did not expect the government to tighten the property market further and push housing values lower.
Prices surged 7.9 per cent last month from a year earlier, to 10,347 yuan (HK$13,096) per square metre, SouFun Holdings, the mainland's biggest real estate website owner, said after a survey of 100 cities. Prices began rising from a year earlier in December, when they climbed 0.03 per cent after a 0.46 per cent slide in November.
Beijing would seek "stable and healthy" development of the property market, the government said after a meeting led by President Xi Jinping this week, prompting speculation that the government might relax property curbs.
Former premier Wen Jiabao in March stepped up a three-year campaign to cool home prices, ordering the central bank to raise down-payment requirements for second mortgages in cities with excessive cost gains.
"Demand from first-home buyers is still strong in the market, while the policy uncertainty has been dismissed as it's unlikely for the central government to issue a nationwide tightening policy," said Dai Fang, a Shanghai-based analyst at Zheshang Securities. "Local governments with big price gains may announce some city-level property policy though."
With the increasing uncertainty about China's economy, the expectation for harsher property curbs was weakening, SouFun said in the statement.
Home values in the southern business hub of Guangzhou soared 23 per cent from last year, while in Beijing they jumped 20 per cent, SouFun said.
"Unlike the previous government, the new leadership seems to aim for long-term development of the property market by allowing the market to play a bigger role rather than using administrative orders," Shen Jian-guang, a Hong Kong-based economist at Mizuho Securities Asia, said before yesterday's releases.
Smaller cities have already begun easing some of the policies designed to restrain price gains. Yancheng, in Jiangsu province, suspended limits on housing prices as supply of homes increased, People's Daily reported last week. The southern city of Dongguan, in Guangdong province, led month-on-month declines among the 100 cities in the SouFun survey, declining 1.7 per cent from June.
"The housing price gap widened further between major and smaller cities," Jinsong Du, a Hong Kong-based property analyst at Credit Suisse Group, wrote in a note to clients yesterday.
"This should continue to prevent the central government from implementing nationwide housing measures in the near term."