Latest statistics show that prices for new houses rose more steeply in more Chinese cities in February, putting the government in an increasingly complex situation of regulating the bubble-ridden market. Our reporter Li Dong has the details.
Of a statistical pool of 70 major Chinese cities monitored by the National Bureau of Statistics or NBS, 66 cities saw new house prices increase within 3.1 percent in February from a month earlier, while three saw prices remain unchanged and only one reported price falls.
The figures indicate warming in the housing market since January, when 53 cities reported a growth margin of no more than 2.2 percent.
New house prices in Beijing and Guangzhou saw the largest increase of 3.1 percent on a month-on-month basis, followed by Shanghai and Shenzhen with price hikes of 2.3 percent and 2.2 percent, respectively.
NBS says in a statement on its website, on a year-on-year basis, 62 cities registered rising prices, with Guangzhou showing the biggest rise, of 8.2 percent, up drastically from January's highest growth rate of 4.7 percent. Beijing recorded the second-largest year-on-year growth of 7.7 percent.
Meanwhile, of the 70 monitored cities, 66 saw increasing second-hand house prices in February, with the largest increase rate reaching 2.2 percent. On a year-on-year basis, 49 cities registered rising second-hand house prices, while three saw prices unchanged and 18 reported drops in prices.
Amid expectations for rising house prices, China's central government issued rules to further tighten controls on the property market on March 1. The government says in an online notice that house owners who sell their houses will be levied an income tax as high as 20 percent on the profit they make on a transaction.
Prior to the new rules, the income tax levied was 1 percent to 2 percent of the sale price. Echoing the new property control rules, many cities are experiencing pre-owned home transaction peaks before the new rules are implemented.
Chen Guoqiang, vice chairman of China Real Estate Society says there will be a slow correction in housing prices after the general public has a better understanding of the rules.
"I believe that the five new regulations will have positive influence on guiding market expectations so as to tame the overheating market."
Chen forecast that the currently hot second-hand housing market would soon cool and the sales volume will plummet as detailed rules and regulations are set in place in different provinces.
"In fact, the new housing policy, the property inventory, supply and demand of the market and some other factors, such as the current policies that emphasize the increase of residential land supply and effective market supply; all will have positive significance on the steady development of the housing market."
Since 2010, the Chinese government has adopted a range of measures, including restricting third-home purchases and introducing property tax trials, to reel in the runaway real estate market, which has been the country's key economic driver in recent years.
However, home prices started to rebound unexpectedly in the second half of 2012, shored up by the country's pro-growth policies, including two consecutive interest rate cuts and the lowering of banks' reserve requirement ratios.
New home prices of a statistical pool of 100 Chinese cities surveyed by the China Index Academy averaged over 9,800 yuan or 1,500 US dollars per square meter, representing growth for a ninth straight month since June.
For CRI, I am Li Dong.