Property market in big cities gets frothy amid leveraged purchase

Increased home transactions have been backed by eased access to credit.Data from the central bank show that new yuan-denominated loans rose to a record high of 2.51 trillion yuan in January.

Analysts say that the surge could have been fueled by increased mortgages, which surged 23 percent in the fourth quarter last year.

A recent research note by Gavekal Dragonomics said that mortgages will only increase in the future as housing demands shift from middle class urbanites to lower-income rural migrants.

Though there is a limit on mortgage amounts, some real estate agencies have been providing additional leverage for people who can not find deposits

One agency provides credit up to 20 percent of their deposit without any collateral. The money was raised through peer-to-peer lending investments that promise 8 to 12 percent annualized return.

This has enabled many to purchase homes that they otherwise could not afford. The results, many in the industry say, would be the return of more speculative demand, pushing home prices to frothier levels.

"There are signs that speculative demands are back again, pushing up home prices with easy credit," said Wang Feng, a real estate analyst based in Shenzhen. "While authorities need to provide ample credit for real mortgage demand, they should be aware of any attempts to seek leverage to speculate in the property market."