Lending to developers increased sharply recently following a period of credit restrictions, while mortgage lending has also accelerated, with the quarter-on-quarter annualized mortgage lending rising by 88 percent in the first quarter and likely to have continued at a rapid pace in recent months, she said in a research note.

Wu Xiaoling, analyst with the Greatwall Securities, said that another factor driving up the property investment was the mounting expectation on future inflation.

Vanke, China's biggest developer by market value, said on June 4 that its first-half property sales rose 28 percent from a year earlier to 30.8 billion yuan.

In face of the mounting risks arising from the recovering real estate market, the country's top banking regulator has warned domestic lenders to strengthen scrutiny on mortgage lending approval.

(China Daily July 21, 2009)