Cooling policies not curbing house prices

Despite cooling policies, many cities still saw house prices rise last month, official data showed, and market experts said Tuesday the upward trend is not likely to be reversed any time soon.

According to the National Bureau of Statistics Tuesday, among the 70 major Chinese cities being tracked, 65 witnessed rising prices in May compared with April.

On a yearly basis, only one city - Wenzhou, in East China's Zhejiang Province - recorded a price fall. Prices of new homes in Beijing, Shanghai and Guangzhou increased by 15.2, 12.2 and 15.5 percent year-on-year, respectively.

For a broader picture, data from the China Real Estate Index System of the China Index Academy earlier this month showed that the average new residential home price in 100 cities reached 10,180 yuan ($1,660) per square meter in May, up 0.81 percent from April and up 6.9 percent year-on-year.

"Despite the authorities' efforts to cool down the sector, people are still expecting prices to keep on rising, partly because many cities have not implemented the curbing measures," said Yin Bocheng, director of the real estate research center at Fudan University.

The central government on March 1 unveiled a 20 percent capital gains tax on existing home sales, as well as higher down payments and mortgages for second-time home buyers, aiming to discourage speculation.

Then local governments in major cities including Beijing, Shanghai and Guangzhou laid down detailed regulations to curb the housing market.

"But they did not carry out the regulations strictly. Such an attitude boosts expectations of continued growth," said Yin, noting that most local governments in China rely on selling land as their major source of fiscal revenue and fear that curbing the industry could hurt local economies.

Chen Guoqiang, deputy director of the China Real Estate Society, said that he expects home prices to continue rising in the years to come, albeit with a slowing growth rate.

"In Wenzhou, many speculators have pulled their money out of the property market, which reduces demand greatly," said Chen.

"Moreover, real estate developers have massive amounts of cash in hand, and they do not have to reduce prices to boost sales," said Yin.

China Vanke Co, the country's largest listed property developer by sales, said that its sales revenue reached 70.18 billion yuan ($11.39 billion) between January and May, up 42.6 percent year-on-year.