Property prices in second-tier Chinese cities such as Kunming surged last month. Photo: iStock
Property prices in second-tier Chinese cities such as Kunming surged last month. Photo: iStock

Concern over Beijing tightening property regulations is putting a damper on the optimism of Chinese developers despite significant rises in home prices.

Almost 70 cities surveyed in June by the National Statistics Bureau saw house prices rise significantly.

A price surge of 6.3% was seen in 31 so-called ‘second-tier cities’ such as Sanya and Kunming, while ‘first-tier cities’ such as Beijing, Shanghai, Guangzhou and Shenzhen experienced no increase in home prices in the same period last year.

Meanwhile, 35 ‘third-tier cities’ also reported 6% growth in home prices in June.

For the 33rd consecutive month, 70 mainland cities have seen prices experience year-on-year growth of five per cent, according to Reuters. The month-on-month growth has been on an upward roll for 39 consecutive months.

Xinhua agency, the official state mouthpiece, has urged Beijing to adopt stern measures to stabilize the home market.

A commentary from the state news agency praised Beijing for doing a good job in controlling the unpredictable property sector, but urged the government to retain a tight grip on policy in order to maintain market order.

In light of global economy uncertainties, the commentary said that while China’s property markets provided support for the overall growth of the economy, Beijing should guard against the market overheating.

Worry over Beijing further tightening property market restrictions took its toll in the stock markets, which in China and Hong Kong fell around 5%.

Developers such as China Evergrande and Country Garden, whose share values tripled in 2017, began share buybacks this month amid the recent market slump.

With stock prices tumbling 30% from their peak, since June China Evergrande has spent HK$2.9 billion (US$369 million) in buybacks; Country Garden also bought back HK$700 million worth of shares while vice chairman Yeung Wai-ying also increased her stake with a HK$457 million purchase this month.