Speculation and massive mortgage liquidity risk forming an asset bubble in the increasingly buoyant mainland housing market, central government officials have warned. But it had no plans for new measures to rein in the sector as Beijing is still seeking to meet a growth target of 8 per cent for the mainland economy this year. 'When the market began to rebound in March and April, it was driven mainly by end-user demand,' the Shanghai Securities News reported yesterday, citing a Ministry of Housing and Urban-Rural Development report. 'But increasing investment demand has emerged in May and June, followed by short-term speculative activity.' There were signs of an asset bubble in the property market and 'the government is closely monitoring the market changes', the report said. Concerns that the property sector was overheating have been echoed by economists and property experts. 'There is a risk of asset bubbles in the property sector, especially as liquidity has become quite available and expectations have changed,' said Wang Tao, head of China economic research at UBS. 'In some cities, I think there has been increased speculative investment in terms of buying properties.' However, she did not think the bubble would spread nationwide as the situation varied from city to city. Nicholas Brooke, chairman of Professional Property Services Group, said the affordability of housing on the mainland was a concern. 'The economy is not in the best of health but the potential for a bubble is definitely there,' he said. Property transactions have surged since the beginning of the year and prices jumped in the second quarter. Home prices in 70 major mainland cities rose 0.2 per cent in June from a year earlier, the first gain in seven months, according to the National Development and Reform Commission. Prices in some first-tier cities such as Beijing, Shanghai and Hangzhou saw larger increases. Property agent Centaline China said a recent survey of its clients found that investors accounted for as many as 40 per cent of buyers at some branches in Shenzhen and Shanghai. Despite rising prices and increasing speculative demand, the central government did not plan to introduce new measures to curb the market at this stage, a government official told the Shanghai Securities News. The mainland's banking watchdog on Thursday night reinforced current credit control policies on second-home buyers. It said the commission's strict enforcement of its mortgage lending policy, which requires a down payment on second-home purchases to a minimum of 40 per cent, had not changed. Previously, some banks have not strictly imposed the policy. Nicole Wong, head of China and Hong Kong property research at CLSA, said she would not describe the market as a bubble. 'The market is a bit overheated, mostly in first-tier cities and high-end prime locations,' she said.