Despite outcries over living costs in China's cities, housing prices soared by 40 percent or more last year in Beijing and Shanghai, according to industry reports.
The surge may spark renewed fears of a bubble in the property market and inflation complaints, but so far, there seems to be no end to the real estate boom.
In Beijing, prices of units in new residential buildings jumped 42 percent to 20,328 yuan per square meter ($284.50 per square foot), Shanghai Securities News reported on Jan. 5.
Prices shot up 40 percent in Shanghai, 33 percent in Shenzhen, and 23 percent in Guangzhou, China Real Estate Information Corp. said.
Over the past year, officials have urged measures to curb property speculation amid warnings that China's cities are becoming unaffordable and worries the market could suddenly deflate.
But Derek Scissors, Asia research fellow at the Heritage Foundation in Washington, said it is far from clear that prices are a bubble about to burst.
"You can't just say it's a bubble because you've had rapid price increases," said Scissors.
"In a lot of cities, especially in eastern China, there's going to be high demand for housing for a long period of time as urbanization proceeds," he said.
"So, seeing property prices rise in those cities may not indicate much more than high demand."
On Monday, the National Bureau of Statistics (NBS) reported lower average growth for home prices in 70 major cities, the official Xinhua news agency reported.
In December, prices rose 6.4 percent from the year-earlier period, the NBS said without giving a figure for the entire year.
Housing demand is only part of the story. Investors have been seeking safe havens for capital, both in commercial and residential construction, Scissors said.
China's property market is still absorbing the effects of the government's 4-trillion yuan ($602-billion) stimulus program in 2009, which boosted the economy and fueled the building boom.
"Money is still pouring into the economy, and that has to go someplace. It's going into property," said Scissors, who expects slower growth this year but not a collapse.
Reports over the past two years have highlighted runaway construction, with some buildings standing virtually empty as investment floods the property sector, backed by cheap loans.
After deputies to the National People's Congress complained last March, Premier Wen Jiabao pledged to slow growth in prices and spend more on affordable housing.
The government temporarily froze land sales, limited loans to developers, and ordered state-owned enterprises out of the real estate business.
In April, the State Council unveiled a series of measures to dampen speculation, including an increase in down payments for larger apartments and second homes.
In December, the Ministry of Finance said the government would gradually introduce a residential property tax under the Five-Year Plan starting in 2011.
This month, both Shanghai and Chongqing municipality said they plan to assess property taxes on high-priced or second homes, Xinhua reported.
Last week, the Communist Party's Central Commission for Discipline Inspection launched a crackdown on housing corruption, targeting officials with "excessive apartments," the official English-language China Daily said.
The Chinese Academy of Social Sciences has cited the threat of a bubble, warning that residential property in 35 cities is already overpriced by an average of 29.5 percent.
But critics have also cited the government's mixed motives in the real estate business.
Last January, for example, the Chinese People's Political Consultative Conference (CPPCC) reported that the housing market contributes half of Beijing's GDP.
In 2009, land transfer fees provided local governments with 1.42 trillion yuan ($214 billion) in revenues. Land sales jumped 70 percent last year, Minister of Land and Resources Xu Shaoshi said.
Xu warned this month that high prices may spark social unrest among those who cannot afford homes, the Associated Press reported.
Climbing costs may also endanger the government's plans to urbanize 200 million rural residents as a way to narrow the growing gap between rich and poor.
"If the cost of living is growing faster than incomes, people are not getting wealthier, and if people are not getting wealthier and they can't afford to urbanize, they won't," said Scissors.
"People would come to cities because they're better off," he said. "If they're worse off, they're not going to come, and that modernization process that China's looking for won't happen at the pace China wants it to happen."
Last year, public anger mounted after the NBS reported that housing prices had risen only 1.5 percent in 2009. Would-be buyers believed prices had nearly doubled.
"Many people said with irony that the officials must have put the decimal point in the wrong place," the China Daily said in a rare critical commentary.
In March, the Land and Resources Ministry estimated the increase as 25.1 percent.
NBS Commissioner Ma Jiantang promised in December to implement new statistical methods for housing prices this year, the paper reported, adding that the earlier figures were "ridiculously low."