Since March 5, when Premier Wen Jiabao called for an end to 'excessive' growth in property prices, the issue has become a political campaign. The jobs of Shanghai party secretary Chen Liangyu and mayor Han Zheng could be on the line.

The pressure rose a further notch on Friday, with the publication of official figures showing that first-quarter residential property prices rose by 19.1 per cent, the fastest in China.

Since Shanghai includes large suburban areas that are semi-rural, this means that prices in the central areas rose by more than 30 per cent.

According to official figures, average property prices in the city rose last year by 14.6 per cent to 6,385 yuan per square metre. Non-official estimates put the figure substantially higher.

At the end of last month, Shanghai banks' outstanding home loans to individuals reached 121.6 billion yuan - an increase of 69 per cent over the same period a year ago - and included 12.5 billion yuan in new mortgages in the first quarter of this year, an increase of 55 per cent over the same period last year.

Since Mr Wen's statement, the central and city governments have gone into crisis mode, imposing higher interest rates on home loans, an increase in the minimum initial deposit from 20 to 30 per cent, a ban on new mortgages for flats sold less than a year after purchase and a 5.5 per cent capital gains tax on properties sold within a year of purchase.

The measures are beginning to bite, such as at the third phase of Minhang district's Kangcheng project, where 325 of those who signed up to buy the first 1,000 units withdrew their offers. Two-thirds of the 325 were investors who were not planning to occupy the apartments, and already had purchased two or three units. They pulled out because of the larger deposit required and higher interest rates.

A loan officer at Shanghai Pudong Development Bank said that he had been ordered to demand an initial down payment of 50 per cent, up from 30 per cent last year, for residential mortgages from non-mainlander buyers.

'The conditions are much tighter than before because we feel that they are not owner-occupiers,' he said.

'But the central bank has not asked to turn down all applications by non-mainlanders. For local buyers, the minimum down payment is 30 per cent.'

The 50 per cent minimum is directed against buyers from Taiwan, Hong Kong and other overseas Chinese, whom the central bank sees as the biggest speculators at the higher end of the market. It now takes the Land Registry a month, instead of the usual week, to process land document transactions.

Last Thursday, the Shanghai bureau of the China Banking Regulatory Commission summoned representatives of foreign banks to a meeting to tell them to pay close attention to risk management.

One banker said foreign banks were not subject to the detailed directives given to state banks but were invited by the commission to accept the 'spirit' of the directives.

'That means slower mortgage lending and lower loan-to-value [requirements],' the banker said. 'The presidents of the Shanghai banks are very responsive because they are politically sensitive to orders from Beijing. The city government is desperate.'

'The middle and upper-middle segments, between 10,000 and 20,000 yuan per square metre, are the most vulnerable,' he added. 'Demand at 9,000 and below is strong and sustainable.

'Demand is also strong at the upper end, with the Taiwanese community in Shanghai big and growing. A possible revaluation of the yuan by 5 to 6 per cent is icing on the cake.'

People in the industry say it is too early to see the impact of these administrative and financial measures on prices but admitted they had slowed turnover rates. Fewer people are buying and the number of units available on the second-hand market is increasing as people seek to offload their properties ahead of a possible downturn.

One foreign property agent attributed the surge in first-quarter prices to pent-up demand, which had been constrained by a lack of supply for two years, combined with a supply of easy credit.

In the last cycle, real-estate prices at the upper end of the market peaked in 1994, before dropping by an average of 25 to 30 per cent a year for two years. The government imposed a three-year moratorium on new high-end property projects from 1995 to 1998.

'Prices for new apartments near the Xintiandi area have reached 50,000 yuan per square metre,' he said. 'It smells to me like 1994-95.'