Average month-on-month new home prices across the nation's 70 major cities skyrocketed in February, official data released Monday showed, intensifying pressure on China's newly elected government to rein in the property sector.
Of the 70 large- and medium-sized cities surveyed by the National Bureau of Statistics, 66 saw an increase in new home prices in February over the previous month, with Guangzhou registering the sharpest growth rate of 3.1 percent, the bureau said Monday. In January, month-on-month prices jumped in 53 cities.
February's surge in new home prices is even starker based on year-on-year figures, with 62 cities reporting a price jump compared to the same month last year. Guangzhou prices surged the most among 70 cities, advancing 8.1 percent from a year earlier. Beijing prices placed second by climbing 5.9 percent.
February's data marked the second consecutive month of year-on-year increases, according to Reuters' calculations based on official figures, and the seventh consecutive month of price hikes in month-on-month terms.
Sharp growth momentum in February surpassed what had been seen in 2009, when the property market was at its most heated, signaling panic among homebuyers in big cities, Zhang Dawei, research director at the Beijing office of Centaline China Real Estate, said in a research note e-mailed to the Global Times on Monday.
Forecasting growth momentum to continue in March, Zhang noted a more moderate pricing increase is expected in April due to the implementation of a raft of new housing controls.
To combat rapidly-rising housing prices, the government announced five general curbing principles in February, which was further clarified early this month. They consist of a slew of tougher measures, including imposing a hefty 20 percent capital gains tax on second homes and raising down payment rates and loan interest rates in cities with excessive price gains.
"We have observed little effect of the policy details thus far," Yao Wei, China economist with Societe Generale SA in Hong Kong, told the Global Times, rejecting that housing prices would cool in the foreseeable future.
The 20 percent capital gains tax, one of the most talked about measures aimed at reining in home prices, inadvertently resulted in spiking second home transactions and prices, Yao stressed.
Liu Ligang, chief China economist at Australia & New Zealand Banking Group in Hong Kong, predicted a 5 percent rise in China's home prices would be likely this year, despite a downward spiral expected for prices in smaller cities, which are commonly seen as suffering a housing surplus.
Liu said many people had last year anticipated government polices would cool housing prices, causing buyers to delay their purchases. However, soaring home prices over the past year persuaded them that waiting any longer might be unwise.
"The situation has become tougher as housing supply has remained constrained. Many property developers have scaled back investments due to the government's housing controls," he said.
Economists' skepticism over the new policy's effectiveness mirrors public frustration about the government's previous efforts to cool the real estate sector, said Yao, adding expectations are high that the new government will take moves to tackle the problem.
"We hope [the government] won't repeat the past when there was also a lot of anticipation that failed to materialize," Yao said.
Instead of short-term measures that claim to deal a blow to housing inflation, policies designed to offer all-round solutions to the nation's runaway market are advised by Liu, who warned a real estate bubble has already been simmering in some big cities.