China's home price inflation may be steeper than official data suggest, with a near quadrupling of home sales in the capital last week after the government unveiled tax plans to curb speculation, a sign that investors have giant gains to lock in.
Pre-owned home sales in Beijing soared 280 percent year-on-year in the week of March 2-8, according to local government data, and were up 141 percent on the previous week.
The government announced on March 1 plans to introduce a 20 percent capital gains tax and higher down payments for second-time home buyers to dampen expectations of more price rises.
(Read More: Why China's Property Market Is Getting Scary)
Analysts say the strong transaction data reinforces an emerging view that the government believes demand is running hotter than official measures of headline price rises imply and decided to rein them in.
"The latest step showed the government's determination to curb speculative demand," Song Lin, chairman of state conglomerate China Resources Holdings, parent of Hong Kong-listed developer China Resources Land, told Reuters.
China's new home prices rose an average of 0.8 percent in January from a year earlier, snapping 10 months of decline, according to official National Bureau of Statistics data, with prices rising in 53 of the 70 major cities it analyses.
In Reuters' weighted index - derived from the NBS data - home prices rose 12.2 percent in Beijing in January from a year earlier - the kind of double-digit rise that has prompted previous crackdowns.
Official data show strong underlying demand despite a three-year-long campaign to curb speculation and price rises.
Home sales soared 55 percent in the first two months from a year ago, outpacing the 37 percent annual rise in the same period of 2010.
"These data forced the government to take immediate action," Jianguang Shen, Hong Kong-based chief China economist of Mizuho Securities Asia, told Reuters.
Confusion reigns over whether the March 1 announcement was a product of the outgoing government of President Hu Jintao and Premier Wen Jiabao, or the incoming administration headed by Xi Jinping and Li Keqiang.
Xi and Li are expected to be confirmed as president and premier, respectively, on March 17 at the close of the annual meeting of China's rubber-stamp parliament.
Wen is widely regarded as having lost his fight to control what he called "the runaway wild horse" of home prices, which rose roughly 10-fold in major cities during his tenure.
(Read More: China Real Estate Won't Bring It Down: Roach)
If the latest orders were from Xi and Li, it likely removes remaining hopes in some quarters that the new leadership would rely on property investment to foster an economic recovery for China in 2013, after its worst full year of growth since 1999.
It would show that the new leaders are determined not to repeat the mistake of 2010 when a similar surge in home prices and sales saw the government wait until after the annual parliament session to announce its calming plans.
By then, price momentum was too strong to reverse.
Sending the signal before the parliamentary meeting is seen by some as designed to underline the new leaders' determination to calm the market long term, given a policy priority of urbanization which may well drive home prices higher still.
China plans to spend 40 trillion yuan ($6.4 trillion) to bring 400 million people to cities over the next decade to turn the country into a wealthy world power with economic growth generated by affluent urban consumers.
"If China wants to speed up urbanization, it needs lower home prices," said Yao Wei, China economist at Societe Generale in Hong Kong.
"If home prices do not fall, rural people who cannot afford an urban home now will not be able to come and live in the cities," Yao added. "That means the new government's stance towards the property market can only be tighter."