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.
Home price rises bring in fears of fresh curbs
Home prices on the mainland continued their rise in May, triggering concern that the government will bring in more measures to cool the red-hot market.
The rapid growth was seen in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, with analysts expecting the growth momentum to continue for the remainder of this year.
New home prices in 65 out of 70 cities tracked by the National Bureau of Statistics showed a rise in May compared with April. Among them, Guilin saw the biggest month-on-month rise, at 2.8 per cent. However, 69 of the 70 cities saw year-on-year increases.
Major cities in general saw a faster pace of growth, with Shenzhen's new home prices rising 1.9 per cent month on month, and 13.7 per cent year on year.
Guangzhou saw the biggest year-on-year growth of 15.3 per cent. Prices rose 1.5 per cent in May against prices in April.
Beijing saw new home prices up 1.3 per cent compared with April, and a jump of 11.8 per cent year on year. The rising momentum was also seen in Shanghai with new home prices up 1.4 per cent month on month, against a 10.2 per cent rise year on year.
Second-tier cities with sound economic fundamentals, such as Shenyang and Dalian, saw new home prices up 1.8 per cent and 1.3 per cent month on month.
Jason Hui Saitan, executive vice-chairman of Shanghai-based Shimao Property, warned that the rises could trigger governments to apply a trial property tax in these cities.
A property tax is an administrative measure that central and local authorities use to curb price surges. The central government could extend the trial property tax first introduced in Shanghai and Chongqing two years ago to more cities, the National Development and Reform Commission indicated last month.
Zhang Dawei, research director at the mainland division of property agency Centaline, said he believed the central government would not impose property taxes or other measures in the short term, as rising prices helped bolster the nation's economy.
Zhang forecast home prices in first-tier cities such as Beijing and Shanghai would rise as much as 15 per cent this year, mainly because of strong demand.
On March 1, the State Council told local governments to strictly follow all policy guidelines introduced to cool the property market, including capital gains tax at 20 per cent, first announced in 1994 but never strictly enforced.