How to make money off China’s new property bubble

China’s large cities are seeing early signs of a new housing bubble, due to the central bank’s continued expansionary monetary policy and local governments’ aggressive moves to clear stockpiles of unsold units, with shares of developers with high exposure to tier-1 and big tier-2 cities likely to outperform the market in the short term.

But analysts also warn that investors need to be aware of policy tightening risks if markets in some cities show signs of overheating.

Housing prices in China’s big cities have soared since the beginning of this year. Average new home prices in 100 major cities rose for a seventh straight month in February, up 5.3 per cent from the same period a year earlier, according to latest statistics from China Index Academy, an independent property research company.

Home prices in the 10 largest cities, including Shanghai, Beijing and Shenzhen, jumped 10 per cent year on year. Among them, Shenzhen saw prices surge 53 per cent while Shanghai and Beijing recorded jumps of 15 and 10 per cent respectively.

READ MORE: China property bubble bound to burst, say experts

The recovery is mainly driven by repeated expansionary measures by the central bank and loosening of housing curbs at various levels of the government, said Tu Lilei, an analyst at Haitong Securities.