New home prices defy curbs

Soaring sales and improved cash flow boosted developers' confidence in the market, which is the reason behind their increasing willingness to enlarge their land banks by paying higher prices.

In addition, brisk sales in first- and second-tier cities have consumed developers' inventory quickly, and developers are eager to beef up their land banks in these cities, He said.

This is clearly seen in Beijing's property market. In the past few months, Beijing developers' inventory has declined fast from the peak of 11 million sq m to about 8 million sq m, which is forecast to be sold in seven to eight months, compared with more than 10 months in other first- and second-tier cities.

"From the inventory perspective, the upward pressure on Beijing's housing prices is even more acute than in Shanghai and Shenzhen," He said.

A separate report by the academy said in Beijing the toughest restrictions have only been effective on slashing housing turnover. Both in April 2010 and February 2011, when the Beijing government rolled out tough measures to curb home buying, turnover fell more than 60 percent.

But those declines failed to dampen prices. As turnover recovered, prices stopped stalling and began rebounding gradually.

The fundamental solution, the report said, is to increase the land supply, either by streamlining developers' procedures for acquiring land or boosting the supply of government-subsidized affordable houses.

But nationally there are also downside factors, market observers said, including the growing new housing construction speed and the central government's continuous tightening of credit supply in the coming months.