New home prices in mainland China rose in May, reflecting the tenth consecutive month of increases. Second-tier cities have been top performers, and analysts expect these urban centres will continue to lead nation wide price growth in the coming months. Prices of new homes in the 100 biggest Chinese cities rose an average 10.34 per cent year-on-year to 11,662 yuan (HK$13,757) per square metre last month, the fastest growth since August, research firm China Real Estate Index System (CREIS) showed on Wednesday. Month-on-month, prices in May picked up 1.7 per cent, building on a 1.45 per cent gain in April. Seventy-four cities saw prices rise from the previous month, compared with 71 in February. “Growth in first-tier cities has been stable, rose faster in second-tier cities but slowed in third-tier cities,” CREIS said in a report. Shenzhen, China’s tech hub and the southern city adjacent to Hong Kong, remained the most expensive city to buy property, but average new home prices there expanded at a slower pace of 2 per cent in May — to 51,361 yuan per square metre. That compares with a 2.84 per cent increase in April. Prices for new homes in the city have jumped 59 per cent in the past 12 months. Shanghai was the second priciest, with the cost of purchasing a house surging 20.7 per cent year-on-year to 40,144 yuan per square metre. New home prices in Beijing rose 13.6 per cent on average. China’s southern port city of Xiamen and Hefei, a city close to Shanghai, saw the greatest price increases last month, rising 5.9 per cent and 5.8 per cent perspectively. Nicole Wong, CLSA’s regional head of property research, said the rising market sentiment, increased salaries and limited new home supply pushed up home prices in second-tier cities. “Home prices are still affordable, we expected prices in some leading second-tier cities to grow 20 to 30 per cent in 2016,” Wong said. Some analysts take a more cautious stance and warn of a policy tightening. Zhang Hongwei, research director of Shanghai-based Tospur Real Estate Consulting, said there could be a price correction in the second half as an upcoming US interest rate hike would further fuel capital outflow from China and that would be a negative to China’s property market. “Monetary policy is also expected to be tightened,” he said, citing calls by Chinese government officials to deleverage the property sector and help cool overheated home prices in hot cities. In the latest move, Nanjing became the second Chinese city to set a ceiling on prices for public land auctions, as a way to rein in the market. This story has been corrected to remove an incorrect figure in the fourth paragraph.