Property prices to rise 5-7 percent in 2014

Property sales are expected to rise 8 to 10 percent year-on-year in 2014, with prices continuing to climb 5 to 7 percent, a report from investment bank UBS said.

Sales growth, according to the UBS report, is driven by the urbanization push.

In terms of prices, the bank forecast a 5-7 percent year-on-year increase in 2014, after 2013's 7 percent increase.

"The home-price growth rate will slow in 2014, depending on the liquidity in the market," said Gao Ting, UBS Securities' chief China strategist.

"Prices in the country's key cities, such as Beijing, Shanghai, Guangzhou and Shenzhen, will set to rise further in the next year, because of robust demand and comparatively low supply. But some second and third-tier cities may see stable or even sliding prices."

Policy changes in a few second and third-cities recently demonstrated that the government was looking at a 'bottom-up' approach. Hence, future policy direction will become more market oriented and specialized, dependent on price trends and economic conditions in local cities, according to the report.

The recent strong uptrend in second-tier city prices could trigger reinforcement of price controls, thus potentially creating some short-term share price volatility, it said.