Property prices in China's 70 large and medium cities jumped by 6.4 percent year-on-year in May despite the government's measures to cool down the market, the National Development and Reform Commission said yesterday.

Experts, however, attributed last month's rise, which was 1 percent higher than that in April, to the "seasonal factor".

Five cities saw a double-digit growth in the prices of new houses, and Shenzhen lead the pack with a 12.3 percent hike. Beijing witnessed a 10.3 percent increase.

"The seasonal factor is one of the major causes for the jump in prices because May usually sees very brisk transactions in the property market," said Richard Wang, associate director of the consulting and research department of international property consultants Debenham Tie Leung.

The bullish stock market and people's wait-and-see attitude had slowed the growth of property prices in the first quarter, Wang said.

Besides, as the risks in stock trading became clearer with a couple of sharp drops in the Shanghai Composite Index, more capital has started flowing back into the property market.

Wang said that with the Olympic Games just over a year away, "Beijing's property price is very likely to continue growing in the coming months".

According to Nick Loup, managing director of Grosvenor Asia, China's residential price is expected to see an overall increase of 5 to 10 percent this year. Grosvenor is a British property firm with three funds in Asia focusing on the real estate sector of Hong Kong and Japan.

Pre-owned house sales, too, increased 6.8 percent last month. It was 0.7 percentage points higher than that in April. Shenzhen and Beijing are still among the top four cities in terms of price hike, with a growth rate of 13.9 percent and 9.7 percent, respectively.

"We expect the price rise to accelerate in the next few months, a usually hot season for property transactions," said a trader with Homelink, a major real estate service firm.

Investment in Shanghai's property market reached 50.4 billion yuan (US$6.46 billion) in the first five months of this year, up 11.2 percent year-on-year.

The growth rate of investment in Beijing's property market, however, fell in May, according to Beijing Statistics Bureau. About 53.3 billion yuan was poured into real estate projects from January to May, with the growth rate being 0.8 percentage points lower than that in January-April.

According to the latest statistics, transactions in the Shanghai housing market in May hit a two-year high even after the central and local governments had introduced new policies to bring down the skyrocketing prices.

A total of 2.66 million sqm and 21,848 apartments were sold in May, up 34 percent and 31 percent, respectively over April.

(China Daily June 15, 2007)