According to Meng Qi, marketing manager for Century 21 China Real Estate, the interest rate hikes not only affected the auction listing volume of secondhand houses in Beijing, but also in Shanghai and Guangzhou.

Decreasing returns from property investment is the major reason for the surge in the auction listing volume. For example, the average monthly rent of a 960,000 yuan mid-sized house in Beijing's Central Business District is about 3,500 yuan. When other costs are taken into account, including taxes, property management fees and heating fees, the annual return is less than four percent. So some investors sell their houses to get out of the property market and invest in the stock market instead. The benchmark Shanghai Composite Index gained more than 20 percent from March 19 to now, far higher than house price increase.

A new policy, called The Management Measures on Individual House Rent in Beijing, is expected to begin in October this year, where homeowners will see another five-percent tax on their house rent, further affecting investors' earning rate.

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