Home prices in large and medium mainland cities in December rose at the fastest pace in 18 months, but analysts said activity in major cities had fallen sharply more recently after the central government moved to cool the sizzling real estate market.
They predicted that prices could fall if the decline in sales volume continued.
Capital values of new and second-hand homes in 70 cities rose 7.8 per cent from a year earlier, the National Development and Reform Commission said yesterday. That topped a 5.7 per cent gain in November.
Prices increased by an average of 1.5 per cent month on month, compared with a 1.2 per cent month-on-month gain in November.
'This is a big rise, taking into account the 1 to 2 per cent rise a few months ago,' said Li Wenjie, general manager at Centaline Property Agency's Beijing office.
Analysts said the rapid increase explained the central government's urgency in tightening credit and increasing supply to curb speculation.
On Sunday, the central government issued a new directive to the nation's financial watchdogs, ordering them to tighten their scrutiny of bank lending to prevent illegal inflows of funds into the market. They will also move to prevent foreign 'hot money' from affecting the market, according to a circular by the State Council published by Xinhua.
