China Home Prices Rise to Fastest Pace This Year

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China's house prices rose at the fastest pace this year in May from a year earlier, though the pace of gains eased from the previous month, highlighting the dilemma facing the central bank as it balances the need to support the economy against holding down housing inflation.

Average new home prices in 70 major Chinese cities in May rose 6 percent from a year earlier, after a two-year high of 4.9 percent in April, according to Reuters calculations from data released by the National Bureau of Statistics (NBS) on Tuesday.

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The rise was the sharpest since January 2011 when Reuters started to calculate the nationwide data.

Liu Jianwei, a senior statistician at the NBS, said however that easing month-on-month gains showed fresh signs of home price rises losing momentum in May, as existing government steps to cool the property market bite.

"There are still many cities seeing home prices rising and the property tightening campaign should continue to focus on implementation," Liu said in a statement.

Liu attributed the sharp year-on-year home price rises partly to the low base last year.

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Evidence has mounted in recent weeks that China's economic growth is fast losing momentum with data showing weakness in May exports and struggling domestic activity.

But China's home prices have been on an upswing since around the middle of last year, and the rise has reignited concerns about property inflation. The government launched a fresh round of measures in March to try to cool prices.

On a monthly basis, prices rose 0.9 percent in May, easing from April's month-on-month gain of 1 percent, Reuters calculation showed. That could indicate the measures are having some effect, though their implementation has been spotty across the country so far.

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The National Bureau of Statistics said new home prices in Beijing in May rose 11.8 percent from a year earlier, compared with April's year-on-year increase of 10.3 percent. Shanghai prices in May were up 10.2 percent from a year ago, versus 8.5 percent annual growth in April.

Gains in May in both cities were the fastest since January 2011.

China does not have an official index for nationwide home prices. Reuters started its weighted China home price index in January 2011 when the NBS stopped providing nationwide data, and instead only gave home price changes in 70 major cities.