BEIJING (REUTERS) - China's home prices hit fresh record highs in October, underlining the challenge facing the government just a few days after it unveiled measures aimed at fostering a stable property market for the long term.
Home prices in large Chinese cities have continued to set records despite a four-year long government campaign to cool the market, adding to the growing threat of a price bubble.
Authorities are also worried about the risk of social unrest that could ripple through the world's second-biggest economy as housing becomes increasingly unaffordable.
Responding to these concerns, the leadership pledged to push forward property tax legislation and allow farmers to sell their land more freely as part of its boldest set of economic and social reforms in nearly three decades.
"The promised property tax, if implemented in a wide area, will likely discourage investment in properties as the carrying cost becomes more apparent and increase the supply of homes for the rental market," UBS economist Tao Wang said in a note to clients.
Average new home prices in China's 70 major cities in October rose a record 9.6 per cent from a year earlier, according to Reuters calculations based on official data published on Monday. It was the tenth straight month of year-on-year increases.
Property prices have climbed despite slower economic growth and government efforts to curb them in large part because of the view that property is one of the best investment options and also due to local government land sales for much-needed revenues.
China's fight against property speculation has centred around reducing financing for buyers and limiting the number of homes people can buy.
The figures from the National Bureau of Statistics showed prices in the largest cities continued to see strong growth momentum.
Beijing's home prices rose 16.4 per cent in October from a year ago with Shanghai up 17.8 per cent and the southern cities of Guangzhou and Shenzhen rising about 20 per cent. All four cities posted the largest gains in October since the data series began in January 2011.
Cities including Beijing, Shanghai and Shenzhen have announced a number of tightening measures in the past four weeks, underlining the government's commitment to stabilise home prices.
Such measures seem to be having some effect, with home prices rising 0.6 per cent from the previous month in October nationwide, easing from September's gains of 0.7 per cent. Month on month gains had topped 1 per cent as recently as April.
Reuters started its weighted China home price index in January 2011 when the NBS stopped providing nationwide data, only giving home price changes in each of 70 major cities.