The transaction volume of apartments in Hangzhou jumped more than 180 percent week-on-week between Sept 12 and Sept 18 as investors flocked to the city to buy second homes before the launch of home purchase limits on non-residents buyers.
The city authorities said that, effective from Sept 19, homebuyers without household registration in the city－known in Chinese as hukou－are not allowed to buy a second home in the city's central districts, in a bid to curb rapidly rising house prices, curb speculative buying and prevent risks.
According to latest data from the National Bureau of Statistics, which monitors new home price in 70 cities across China, the average price in Hangzhou increased 3.3 percent month-on-month in August, the 17th consecutive monthly rise.
August's data represents a sharp turn around for the momentum of the property market after the last three months of slowing growth rates. While the fastest acceleration in price growth was still in leading first and second tier cities, lower tier cities also shared in the reversal in fortunes.
"With prices now rising at the fastest rate in more than five years, the policy environment is likely to shift again, cooling the property market in the leading cities more than it has in the past few months," said James Macdonald, Head of China Research at Savills.
Hangzhou became the fourth tier-two city to curb property purchases in 2016, following Xiamen, Hefei and Suzhou, which introduced various measures to limit home purchases and applications for financing.
Zhang Juying, a resident of Jinhua who rushed to Hangzhou to buy her second apartment in early September, said the curbs showed that home prices in Hangzhou are going to rise further.
"The curbs mean that inventory and supplies are limited, and demand is great, which results in higher prices－otherwise there is no need for curbs. In fact, investing in the property market is perhaps the only type of investment in which we feel a return is guaranteed," said Zhang.
Property agents in the city said that home prices are rising so fast in the city because supply is failing to keep pace with demand.
