All-property prices across 70 cities in China increased by +11.7% in March 2010 from a year ago, which is the biggest increase since the index began in 2005, according to the National Bureau of Statistics.

China has increased mortgage rates and re-imposed a sales tax on homes in the first two months of the year to reduce the risk of asset bubbles. They have also increased the minimum down-payment for purchases of second homes from 40% to 50% in an attempt to curb speculative buying.

Brian Jackson, emerging-market strategist at the Royal Bank of Canada, said: “To convince homebuyers that it is fully committed to curbing overheating and reducing bubble risks, Beijing will need to use all of its policy tools, and that most obviously includes higher interest rates.”

The Government announced in March 2010 that developers would have to pay higher deposits for land purchases and banned banks from lending to builders found to be hoarding land or holding back home sales in anticipation of higher prices.