The recently implemented cooling measures in China’s property market had little effect last month with property prices increasing 23 percent in Beijing, 31 percent in Shanghai, 56 percent in Guangzhou and 84 percent in Shenzen, according to the South China Morning Post.
The inability of the current cooling measures to curb property prices may prompt the central government to implement new austerity measures, said the Morning Post. The previous property measures may spur sales by making homes cheaper.
“This may trigger the introduction of stricter enforcement of existing measures,” said Lee Wee-liat, regional property research head at Samsung Securities.
“If prices continue to grow, the government may introduce a property tax in one or two cities or even tighten credit conditions for developers as a way to reduce the asset bubble.”
The central government has implemented cooling measures in April, including raising lending rates loans, banning mortgages on third home purchases and increasing minimum down payment on investment properties, as a response to increasing home prices.
In 2009, home prices in China’s biggest cities have skyrocketed — Guangzhou rose 41 percent, Shanghai 43 percent, Beijing 88 percent and Shenzhen 95 percent. The April cooling measures have curbed prices at first, falling as much as 60 percent in major Chinese cities, but began to pick up again in July and surged in August.