China’s home prices rose at their fastest pace in almost two years in August, adding to the likelihood of more government tightening in the housing market. New-home prices gained 1.49 per cent from the previous month, according to Bloomberg calculations based on data for 70 cities released by the National Bureau of Statistics on Saturday. That compared with a 1.2 per cent increase in July. It was the sixth straight monthly acceleration. Of the 70 cities, the biggest month-on-month price increase in August was a 3.4 per cent gain in Wuxi, the data showed. In Beijing, where more tightening was announced on Thursday, prices were unchanged; in Shanghai, they were up 0.1 per cent. The government is likely to maintain property curbs, based on fears that any relaxation will lead to another round of price surges, Haibin Zhu, the chief China economist at JPMorgan Chase, said ahead of the data. Officials are seeking to keep housing affordable and limit the risk of destabilising bubbles. China’s new home prices in June rise fastest in 20 months “The government worries a lot,” Zhu said in an interview in Hong Kong. “At this stage, there’s no intention to relax the housing tightening.” For Zhu, the biggest worry in the housing sector is the diminished role of market forces in pricing and sales, as the government’s “temporary” administrative restrictions become permanent. Tightening measures – including purchase and resale curbs, increased down-payments and price caps – have been rolled out in 114 cities, according to brokerage CLSA. Most were imposed after March 2017, a CLSA presentation showed. China’s housing ‘melt up’ continues, as new home prices rocket most in 19 months during May Despite this year’s price gains, China’s developers are facing their gloomiest outlook for eight years, weighed down by a squeeze on financing, a looming property tax and home-purchase curbs, according to a sentiment index compiled by Standard Chartered. Some builders are offering free luxury cars and hefty discounts to speed sales. The property market remained lukewarm in some of the country’s biggest cities, however. Prices in Guangzhou and Shenzhen, in southern China’s Guangdong province, were up 0.9 and 0.5 per cent respectively month-on-month. IN HAINAN, CHINA’S HAWAII, A HOT PROPERTY MARKET PROVES HARD TO COOL The coastal city of Xiamen experienced a 0.1 per cent slump in prices for new homes in August, while its year-on-year rise was 0.3 per cent. In 2017, the city had recorded the country’s lowest average rental yield of just 1 per cent, according to a report by Shanghai-based E-house China R&D Institute. At that rate, investors could expect to wait 100 years to recover their initial investment if they relied solely on rent. Sanya and Haikou, the two hottest destinations in Hainan province not only for tourists but also for home buyers, posted month-on-month increases of 0.1 and 0.9 per cent respectively, compared with a year-on-year surge of over 20 per cent. China has picked up progress in reforming its property tax system, with a first draft to be ready for national legislative review this year, according to a report this month by Beijing-based The Economic Observer .