Leading officials of five cities were questioned by the Ministry of Housing and Urban-Rural Development on whether they had strictly followed the tightening policies on the property market, indicating that the central government won't loosen its grip on the housing market in order to prevent excessive price hikes and other irregularities.
Officials from Haikou and Sanya in Hainan province, Yantai in Shandong province, Yichang in Hubei province and Yangzhou in Jiangsu province addressed questions from the Ministry of Housing and Urban-Rural Development last Friday, according to a report in People's Daily.
The officials from the cities were asked to explain whether they had strictly followed the central government's guideline in tightening the real estate sector, carried out measures to combat speculation and rectify the irregularities in the market, and prevent house prices from rising too rapidly.
This is the second time that Haikou and Sanya's leading officials were questioned by the ministry in four months. The two cities took the lead in home price growth in the past six months, with Haikou ranking as one of the top three cities for month-on-month new house price growth for four consecutive months.
In its latest report on 70 cities' home prices, the National Bureau of Statistics said Sanya topped the new home price ranking with month-on-month growth of 3.7 percent in July, and Haikou ranked ninth with 2.3 percent.
Haikou's new house prices rose 2.1 percent in March from a month ago, 0.7 percent higher than second-ranking Qinhuangdao in Hebei province.
During the May Day holiday, leading officials from Haikou and Sanya, along with their counterparts from Chengdu, Taiyuan, Xi'an, Changchun, Harbin, Kunming, Dalian, Guiyang, Xuzhou and Foshan were questioned by the ministry.
In April, Haikou and Sanya both ranked second for new house price growth from the previous month with a rise of 1.9 percent; and the two were in third and second place in May with month-on-month growth of 2.1 percent and 2.4 percent, respectively.
In June, Haikou again became the city with the greatest single monthly growth from May of 3.9 percent, and Sanya was ranked fourth with growth of 3.2 percent.
Similarly, Yantai and Yichang's new house prices grew 2.9 percent from the previous month in July, and Yangzhou's rose 2.8 percent.
The Ministry of Housing and Urban-Rural Development said at a work conference in Shenyang in Liaoning province in early August that all local governments should systematically analyze the problems and major risks in their property sector, and ensure the stabilization of house and land prices.
The ministry will create a market monitoring system to measure the fulfillment of local governments' property measures, and those failing to meet their targets will be held accountable.
Analysts said a mechanism for the ministry to question cities with higher house price growth is being formed, which will drive local governments to maintain strict controls to rein in house price growth.
"House prices will be at the center of the housing ministry's work in the second half of this year, and the questioning of the five leading officials is merely the start," Zhang Bo, chief analyst with Anjuke, was quoted as saying by Securities Daily.
More than 60 cities announced more than 70 real estate tightening measures in July, and more than 25 cities have followed suit so far in August.
"Cities with higher house price growth would all be under strong pressure, and it is highly likely for these cities to announce stricter tightening measures in the property market," said Zhang Dawei, chief analyst at Centaline Property Agency Ltd.
More severe policies such as setting a home price limit or capping growth of home prices could possibly be introduced, and a tightening policy environment will become the new normal for the housing market, added Zhang.