The central government's measures to cool down the property market were confronted with the recent challenge of rising housing prices in July, the eighth-consecutive month with faster growth.
Statistics provided by the China Real Estate Index System on Wednesday showed that the average price of the new homes rose 7.9 percent year-on-year in the 100 monitored cities in July, while the year-on-year growth rate in June was 7.4 percent.
Average residential property prices in July were also 0.87 percent higher than in the previous month, while the month-on-month growth rate was 0.77 percent in June.
Amid the economic slowdown, consumers expect no further tightening policies from the central government for the property market. Therefore, the growth rate was faster in July, experts at the China Real Estate Index System said.
Wang Yiming, vice-president at the Academy of Macroeconomic Research of the National Development and Reform Commission, said that the property market, as an effective way to invest, will continue to play a very important role to stabilize the economy.
"The property market has been picking up gradually in the past few months. For the second half of the year, investment in the entire property industry will be kept at a steady but high level," he said.
The average price of new homes in the 100 monitored cities reached 10,347 yuan (1,688 U.S. dollar) per square meter, higher than the average 10,258 yuan per sq m in June, the China Real Estate Index System's figures showed.
A total of 61 cities out of the 100 monitored cities saw average housing prices up month-on-month in July, while 39 saw declines. The average residential housing price in Quanzhou city, Fujian province, was up 4.5 percent month-on-month in July, the highest growth rate among all the monitored cities. Average residential housing prices in Beijing and Shanghai were up 2.5 percent and 0.9 percent, respectively.
Meanwhile, average housing prices in the 288 Chinese cities monitored by real estate services company E-House China were up 0.84 percent month-on-month in July, higher than the 0.4 percent in the previous month. The average price was up 11.4 percent year-on-year, much higher than the 4.2 percent in June.
"The property market is quite healthy for the time being as far as I am concerned. The construction of apartments for compensation purposes is going on rapidly in many places in the country, which allows more property developers to take part in those projects. I think the development of the property market will be faster and healthier," said Xue Jianxiong, a senior analyst at the China Real Estate Information Group.
In a meeting of the Political Bureau of the Communist Party of China's Central Committee on Tuesday, the central government's requirement for the property market was simply steady and healthy development, without mentioning any controlling policies. The central government carried out a series of tightening policies for the property market in 2010.
The subtle change made the prices of listed property developers soar on Wednesday. Three companies saw their prices increase to the day's trading limit of 10 percent while a total of 110 companies saw rising prices.
"It's good news for the property market that it was little mentioned in the last meeting of the Political Bureau. The only mention was to ensure the property market's stability and health, as opposed to previous meetings where measures to strengthen or maintain price controls were pledged. Going forward, the property market should stay strong, with upward price movements and no harsher controlling policies," said Dong Tao, a Hong Kong-based economist at Credit Suisse AG.
A price index provided by Credit Suisse showed prices have been increasing since June 2012. Tao said there is a bubble in China's property market, but it won't burst in the foreseeable future.