Home bubble in China?

February saw Chinese home prices surge to their fastest rate in two years, leaving many observers fearing the market could be entering a bubble.

Average new home prices in 70 major cities climbed 3.6% year over year in February, topping January’s 2.5% rise, according to Reuters calculations based on data released by the National Statistics Bureau (NBS).

It was the fastest growth rate since June 2014, with 32 of 70 major cities posting price gains, up from 25 in January.

Meanwhile, the NBS data showed that despite government measures and increased lending, the property markets in smaller cities remain soft with a glut of unsold houses weighing on prices.

Most third-tier cities still saw on-year prices drops in February, though the declines eased from the previous month.