Price controls eased at high end for major cities in China

The mainland's top cities lifted a price cap on home pre-sale licences earlier this month, in a move that will release blocked high-end projects and add fuel to an already red-hot land market.

However, it does not mark a loosening of a broader tightening campaign targeting the property sector, now in its fifth year, industry analysts said.

"The measure can be reapplied towards the end of this year if needed," said Lu Qilin, research head of consultancy Shanghai Deovolente Realty.

Shanghai imposed an implicit limit on the price of new homes that could be approved for pre-sale in November. In one example, Shanghai media reports said it was set at 20,000 yuan (HK$25,420) per square metre in the city's Baoshan district. That month the city also intensified other measures to curb price rises, including harsher purchase restrictions, after the price of housing rose more than 20 per cent in the 12 months to October.

Beijing imposed a 40,000 yuan per square metre price ceiling at a closed-door meeting with developers in November, while Shenzhen and Guangzhou took similar steps. But this month, both Beijing and Shanghai gave the nod to expensive residential property projects, apparently removing the price limits.

"We are trying to rein in home price rises via increasing supply this year," said a source at Beijing's housing bureau, referring to the capital's plan to build 50,000 new homes this year - to be priced 30 per cent lower than those in the same neighbourhood - for middle-class and low-income families.

That would bring housing policies in line with President Xi Jinping's preference for market-oriented tactics, analysts said. To that end, the central government has said it will let cities address their own housing problems without imposing nationwide policies.