China’s property market has surged in recent years. After prices jumped 25 per cent in 2009 alone, the central government imposed austerity measures, including lending curbs, higher mortgage rates and restrictions on the number of homes each family can buy.
Curbs fail to slow China home costs
Data shows price rises test leadership's ability to rein in property market and lift growth
Prices of new homes on the mainland continue to climb, with nearly all 70 cities the government tracks recording a month-on-month price growth in February, testing the new leadership's ability to curb prices while stimulating economic growth.
Latest figures released by the National Bureau of Statistics yesterday show 66 of the 70 cities recorded gains in new home prices in February month on month, up from 54 cities in January.
Wenzhou was the only city that saw a drop in prices, down 0.4 per cent from January. Prices in three cities were unchanged.
"It's not a surprise as the government has been easing monetary policy since June," said Credit Suisse's regional head of property research, Du Jinsong, adding that only policies such as credit tightening will bring down home prices on the mainland.
Du said home prices should continue to rise, at least until the end of the year, when the government might tighten monetary policy again.
Last month's price rise was bigger in larger cities. New private homes in Beijing and Guangzhou saw the largest jump, at 3.1 per cent from January.
Prices for new homes rose 2.3 per cent in Shanghai and 2 per cent in Nanjing. The same trend was evident in the secondary home market as well, with prices rising in 66 cities in February.
On a year-on-year basis, the price of a new home rose by up to 8.2 per cent in 62 cities while prices dropped in eight cities.
On March 1, the State Council released guidelines instructing local governments to strictly follow policies introduced earlier to cool the housing market.
These policies include enforcing a 20 per cent capital gains tax and requiring higher down payments and interest rates for those buying a second home in cities where prices have surged rapidly.
Some analysts said developers might benefit from the capital gains tax as homebuyers are expected shift from the secondary market to the primary market.