Full-year sales increased to 4.399 trillion yuan (US$ 644 billion), with residential sales jumping 80 per cent, the NBS said today.
Home prices rose 7.8 per cent in December from the same period a year earlier, the fastest growth in 18 months. Average prices in 70 large and medium-sized cities across the country rose 1.5 per cent between November and December.
Increases were much higher in the largest cities. Zhejiang topped the increase in sales value with a 130 per cent gain. In Shanghai, the gain was 126 percent.
Mainland banks in Shanghai's red-hot housing market lent 99.58 billion yuan in new mortgages last year, the People's Bank of China said yesterday.
In November, the average price of new homes in urban Shanghai was 31,209 yuan per square metre, up 68 per cent from 2008.
Many economists are concerned because many sales are speculative and prevent the bulk of the population from buying a home because they cannot afford such high prices.
Many migrants, who are the engine of China’s growth because of their low wages, cannot pay and have to go back to their villages.
In order to rein in speculation, the government has announced and partly implemented a number of measures, including a sales tax on second homes and on homes sold within five years of their purchase. However, this has not discouraged investors, favoured by easy accessible, low interest bank loans. At the same time, the government does not want to kill the property market because it represents 8 to 10 per cent of GDP.
For some analysts, the government’s intervention might be too little too late if it is not decisive.
About 20 per cent of all loans extended by Chinese banks now go to the real estate sector, including individual mortgages and loans to developers, according to Wang Zhaoxing, vice-chairman of the China Banking Regulatory Commission.
Hence, if prices should collapse, its effects would be disastrous, and not only for property owners but for the whole of the financial system.
Some are concerned that the property market might burst as it did in the United States, where banks gave too many loans that buyers could not pay back forcing the banks to choose between losing money and evicting millions of people.