By Charles Riley @CRrileyCNNApril 17, 2013: 11:34 PM ET
HONG KONG (CNNMoney)
Home prices continued to climb in China last month as buyers rushed to complete sales before new government efforts to cool the country's property market kicked in.
Housing prices rose in 68 of 70 Chinese cities in March when compared to the previous month, according to the National Bureau of Statistics. Compared to the previous year, prices were higher in all but two of the same 70 cities.
Prices in the capital, Beijing, registered one of the largest increases, rising 8.6% over the previous year. In the southern manufacturing hub of Shenzhen, prices jumped 8.9%.
Real estate prices have been trending higher for much of the last decade in China, sparking a cycle of government reaction.
In response to the latest round of rising prices, China's central government last month directed local governments to rein in housing prices by April 1.
Authorities in Shanghai told banks to stop issuing loans to individuals attempting the purchase of a third home.
Beijing announced that single residents will now be allowed to purchase only one home. Both cities said they would strictly enforce a 20% capital gains tax on income earned in property sales.
The announcements set off a fresh wave of buying, and some couples in Beijing even hatched schemes to skirt ownership restrictions by obtaining a divorce.
Wang He Tao, a real estate agent at Century 21 in Shanghai, told CNN that March was his busiest month in the past eight years.
But the government's efforts might not have the desired effect. Past cooling measures were successful in the short-term, but prices soon resumed an upward swing.
"All these new measures are going to maybe slow down the price growth a little bit, but its still going to go up anyhow," said Nicole Wong, head of regional property for CLSA.
China puts brakes on its housing market
Citing rampant speculation and poor planning, some China analysts are worried about the development -- and possible deflation -- of a housing bubble.
Yet other analysts insist that fears of a bubble are overstated. Hundreds of millions of Chinese are expected to move from rural areas to cities over the next decade, they say, and demand is likely to remain strong.
"While China's property sector may have built up some unhealthy parts, the lack of household leverage and the absence of near term catalyst in changing the underlying fundamental support means we are unlikely to see a collapse of housing market soon," Tao Wang, an economist at UBS, wrote in a recent research note.