New and second-hand home prices rose in February from January in 66 of China's 70 largest cities, the National Bureau of Statistics said.

The strongest gains were seen in the top four cities, where Beijing and Guangzhou both recorded a 3.1% month on month increase in new home prices in February, Shanghai 2.3% and Shenzhen 2.2%.

The month on month price increases in second-hand homes were weaker than those in new homes. The prices of the second-hand homes in Beijing averaged 1.7% higher in February than January, the fastest in all 70 cities, according to the bureau.

Investment in China's real estate market rose 22.8% year on year to ¥667 billion in the past two months, where investment in residential space was up 23.4% to ¥458.3 billion, according to earlier figures from the bureau. Between January and February, overall property sales volume was up 45.9% to 104.71 million square meters where residential space sales volume was up 55.2% to 94.94 million m2; overall property sales revenue was up 77.6% to ¥736.1 billion, where revenue from residential space sales was up 87.2% to ¥630.1 billion.

The hectic market follows the toughest property policies announced recently, including one that a 20% capital gain tax will be imposed on a transaction. The capital gain refers to the difference between the price at which the owner sells a property and the price at which the owner bought it.

It is not yet known from when the tax will be levied. The 20% tax policy has spooked the market, leading to a surge in second-hand home selloff.

Qi Ji, vice minister for housing and urban and rural development, said details will vary for implementation in different provinces and municipalities. It is expected that regional variations will be unveiled by the end of March.

During his inaugural press conference, China's incoming premier Li Keqiang did not comment specifically on real estate and existing policies, but stressed that the government will rebuild 10 million shabby shacks during the urbanization plan touted by him.

Wen Jiabao said last month that the government planned to finish building 4.7 million cheap homes for low-income earners and begin building 6.3 million such homes this year. The numbers were 5 million completions and 7 million starts last year.

$1 = ¥6.21

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