Frothy home prices keep going up

China’s major cities saw home prices grow for the 15th month in a row in July, with the growth rate continuing to accelerate, a report showed onMonday.

The average housing prices of 100 sample cities tracked by China IndexAcademy rose 1.63 percent in July to 12,009 yuan ($1,810.55) per square meter, according to the independent property research institute.

Jiaxing (4.94 percent) in Zhejiang province, Langfang( percent) in Hebei, and Hefei (4.17 percent) in Anhui led the price growth last month, while Beijing, Shanghai and Shenzhen are among the top 25, the report showed.

Sixty-six out of the 100 cities witnessed a month-on-month price increase, down from 73. And 30 cities experienced a price drop, compared with 22 in the previous report showed.

Analysts believe that first-tier cities’homeprices will continue to increase in the second-half year, fueled by strong demand. Some second-tier hubs, however, with more investment-led demand, are expected to see their home prices cool down, due to the government’s decision to ease the assets bubble.

Curbing asset bubbles is one of the priorities for the central government, said the Political Bureau of the Communist Party of China Central Committee in late July.

Guo Yi, marketing director of realestateconsultancycompany Yahao, said that asset bubbles were attributed to the loosening month, the monetary policy this year.

The government’s new statement, however, would cool down the market in cities that have seen a price increase higher than 100 percent this year, according to a real estate analyst in a securities company, who declined to be named.

But for key cities like Beijing and Shanghai, the prices will continue to increase slightly in the second half year, buoyed by strong demand, said Guo.

With surging land prices, property developers plan to develop more high-end projects which have higher profit margins. Vanke, the country’s largest property developer, for instance, launched three luxury residential projects in Beijing this year, all eyeing the city’s high-end customers.

average housing prices per square meter in July