China's property market showed restraint after growing strongly last year. Accelerating home sales and rising property prices triggered fears of an asset bubble forming. As a result, cooling measures were implemented in October, characterized by city-specific rules targeted mostly at tier-1 and overheated tier-2 cities.

To assess the property market's developments in the second half of last year and gauge developers' outlook for the first half of this year, we (at Standard Chartered China) conducted a semi-annual survey of the property markets in first-, second- and third-tier cities in February after the Spring Festival holiday.

The survey shows developers' construction activity accelerated in the second half of last year, and the momentum is expected to continue in the first half of this year. The momentum in second- and third-tier cities was stronger than in first-tier cities due to expectations of better sales and the need to accelerate sales revenue. Some developers in third-tier cities reported favourable measures from their local governments supporting construction.