Tier-one cities see house prices jump

China's housing prices continued their upward trajectory driven by a price jump in tier-one cities, official data showed Saturday, making it more pressing for policymakers to cool the property sector.

Among the 70 major cities tracked by the National Bureau of Statistics (NBS), 67 of them saw the prices of new homes rise in April, with the highest month-on-month increase of 2.1 percent being seen in Guangzhou. Beijing, Shanghai and Shenzhen had 1.4, 1.7 and 1.8 percent rise respectively in April compared with March.

Average new home prices rose by 4.9 percent in April from a year ago, after a year-on-year increase of 3.6 percent in March, based on Reuters' calculations from NBS data released Saturday.

The month-on-month price increase had slowed down in many cities in April from March though, Liu Jianwei, a senior statistician at the NBS, said in a statement.

"The market expectations on rising home prices have not changed fundamentally and the property tightening measures are still at a critical stage for strict enforcement," Liu said.

Despite the central government's efforts to launch a fresh round of measures to cool the sector in March by fighting against property speculation, urban housing is still beyond the reach of many middle-class people especially in tier-one cities such as Beijing, Shanghai and Guangzhou.

April marked the 11th month in a row of floating prices seen in Beijing's new home market, and the sixth consecutive month for existing homes in the capital.

The persistent high prices have already forced the Beijing municipal government to raise rate on added value tax for land, from 5 to 8 percent, China Business Journal reported Saturday citing a property developer.

As the property market continues to soar, raising tax rates on property developers could lead to the rising costs being passed onto home buyers, Yang Hongxu, research director of Shanghai-based E-House Real Estate Institute, said in his Weibo on Saturday.

"At the current stage, Beijing's (higher VAT) policy is not a good one," Yang said.

The hiking prices have stoked dissatisfaction among those who cannot afford to get on the property ladder and have fueled criticism that the tougher the government gets on housing control, the higher the prices will go.

The latest round of housing control measures starting a 20 percent tax on capital gains from the sale of second hand homes was widely lambasted, with public tolerance plummeting as these measures have only worsened the burden on home buyers, said Niu Fengrui, director of the Institute for Urban and Environmental Studies.

"While the government tries to contain prices, it contains demand and doesn't increase supply," Niu told the Global Times on Saturday.

There is little land available for auction each year, and the State-controlled policy on how many pieces of land are released to the market have resulted in price hikes for new land and new homes alike.