Chinese property prices rose at the fastest pace in nearly five years in March, according to official data released on Wednesday. This is likely to add to concerns of a bubble developing in the real estate market.
Prices in major cities rose 11.7 per cent year-on-year in March, the National Bureau of Statistics said on its website, marking the biggest year-on-year rise for a single month since the survey was widened to 70 cities in July 2005.
That topped the 10.7 per cent increase in residential and commercial property prices recorded in February and the 9.5 per cent jump in January.
Policymakers have pledged to step up efforts to rein in runaway prices amid growing complaints that apartment prices are out of reach for many people.
But homebuyers and property developers were not getting the message and more drastic measures like interest rate hikes were needed to calm market activity, said Brian Jackson, senior strategist at Royal Bank of Canada in Hong Kong.
“Today's data affirms anecdotal reports that activity and sentiment remains robust," said Jackson.
“To convince homebuyers that it is fully committed to curbing overheating and reducing bubble risks, Beijing will need to use all of its policy tools, and that most obviously includes higher interest rates.”
Analysts have forecast an interest rate hike as early as this month after massive bank lending in 2009 triggered fears that the cash flood has fed a spending spree by property speculators.
Prices of new homes rose by 15.9 per cent year-on-year in March, the statistics bureau said. Haikou, a city on the tropical southern island of Hainan, recorded the biggest price jump, up 64.8 per cent from a year ago.
Sanya, another city on Hainan, saw prices soar 57.5 per cent year-on-year.
Property sales in the first three months of the year surged 57.7 per cent to 797.7 billion yuan from the same period last year, it said.
Investment in real estate development rose 35.1 per cent to 659.4 billion yuan over that period.