Surging new home prices in China showed no signs of waning in July, but looming policy tightening and unrestrained sales growth suggests a possible cooling-off in the months ahead. Average new home prices in 100 cities rose 1.63 per cent in July to reach 12,009 yuan per square meter, an acceleration from the 1.32 per cent expansion in June, China Index Academy, a research institute owned by SouFun Holdings, said on Monday. Separately, an index launched on Monday by China Real Estate Information Corporation and E-house R&D Institute showed that new home prices in 288 cities rose 1.35 per cent month on month in July. Both gauges showed July was the 15th consecutive month-on-month gain. A closer look at the two monthly data figures shows that the gains in different cities were uneven. New home price gains widened in 100 cities even as seven fewer cities saw a month-on-month rise. In the China Index Academy’s data, the city of Jiaxing in Zhejiang province adjacent to Shanghai, saw the largest month on month jump of 4.94 per cent. Other cities with the highest price increases include Langfang (near Beijing), Hefei and Xiamen. The second index of 288 cities showed similar hotspots in second-tier cities such as Hefei, Nanjing and Xiamen, while in first-tier cities new home prices in Shanghai gained 3 per cent and in Beijing they were up 2.6 per cent. In July Shenzhen’s price growth moderated to 1.66 per cent while Guangzhou gained 1.42 per cent. The index compiler noted there were “apparent policy direction shifts” recently, as sharp price upticks in Hefei and Xiamen have already led to policy tightening in those cities, and Nanjing is expected to follow suite. Sales and prices in these locations could face a cooling-off period, it said. In July, a number of cities including Tianjin and Wuhan cut the maximum amount of housing provident funds homebuyers can borrow. Shanghai’s banking regulator also vowed to control risks arising from housing credit. In a Politburo Standing Committee meeting on July 26, China’s top decision-making body mentioned a desire to “curb asset price bubbles”, a statement not seen in previous meetings. Top officials should heed the credit splurge in the housing sector. In the first six months of this year, financial institutions extended 16.55 trillion yuan worth of mortgage loans to homebuyers, up 30.9 per cent from the same period last year, far outpacing the 14.3 per cent growth in total loan growth, according to the People’s Bank of China. “More tightening is expected in some hotspot second-tier cities. The priority in third and fourth-tier cities remains the cutting of excessive inventory,” said the China Index Academy.