With the mainland's A-share markets in bubble territory, concerns are growing once again that its property markets may also be in danger of overheating.
The authorities are clearly worried. Nationwide property investment over the first eight months of the year jumped by 30 per cent compared with last year. In Guangdong province, investment rose 36 per cent.
As a result, prices are climbing. National property prices rose 8 per cent over the 12 months to August, with much greater increases in a scattering of economic hot spots. Prices in Beijing, for example, were up by 12 per cent, while Shenzhen rose a hefty 21 per cent.
In response, last week the central bank and the China Banking Regulatory Commission slapped a new round of restrictions on lending to property buyers. From now on, mortgages on commercial properties and second homes must be charged at a premium to benchmark lending rates. At the same time, minimum down payments on second homes were jacked up to 40 per cent of their value from 30 per cent, while the cash portion of commercial property purchases was raised to at least 50 per cent.
The new steps follow a sequence of interest rate increases and are the latest in a series of administrative measures aimed at blowing some of the speculative froth off the mainland property market. Earlier actions include restricting property lending, raising taxes and making foreign investment in mainland real estate more difficult and time-consuming.
Equity investors share some of the concerns about an overheating property market. The stock in leading mainland-listed developer China Vanke has declined 14 per cent since its August high. Yesterday, the Hang Seng properties index dropped 5.65 per cent on worries expectations have become overblown.