China's property market is rife with speculation - both about rising house prices and about what the new government may do to curb them once it takes office next week.
Asset prices have whipsawed as investors first bet that government-mandated infrastructure spending would boost real estate prices, only to then fret about new measures to cool a market that has seen double-digit annual price rises in cities like Beijing and Shenzhen.
Markets appear more nervous than the government about the pace of price rises revealed by official January housing data issued last week, and economists at influential state-run think-tanks reckon investors are right to be worried that the new government is preparing to widen a pilot property tax as part of a broader reform of land and fiscal policies.
"China needs to establish a long-term policy system. Right now restrictions only target property transactions," Sun Xuegong, an economist with a think-tank under China's powerful National Development and Reform Commission, told Reuters.
He said China urgently needs a blueprint to stabilise the real estate market, and Xi Jinping and Li Keqiang - set to take over as president and premier, respectively, at China's annual meeting of parliament from March 5 - would not shy away from delivering one.
Wang Jun, an economist with the China Centre for International Economic Exchanges (CCIEE) think-tank, believes the only thing holding back new property tightening measures has been the political transition. "Any breakthrough is impossible in the current government's last month in office," he said.
He said repeated assurances to curb home prices during outgoing Premier Wen Jiabao's decade in charge had clearly failed and the new leadership would be determined not to let history repeat itself.
LOOKING FOR CLUES
The raft of tightening options includes expanding the property tax to all of China's biggest cities to raising downpayments and mortgage rates on homes - all of which would likely dent the number of deals and put fresh strain on developers who need sales turnover to service their debt.
Domestic media have circulated what they say is a list of cities that may follow Shanghai and Chongqing on the property tax pilot the government started in 2011. Beijing, Shenzhen, Hangzhou, Wuhan and Xiangtan are all included, though no local government or ministry official has confirmed the candidates.
Analysts say it is likely that China's big cities, currently experiencing double-digit annual property price rises, are most likely to bear the brunt of any new tightening moves.
"We'll need to look for policy signal clues from the next leaders during the (parliament) meeting," CCIEE's Wang said.
So far, signals have been conflicting.
The last meeting of the State Council - China's cabinet - chaired by Wen last week merely said a campaign to cool property prices was on track, and restated its broad terms.
But bearish investors note that those terms include requiring provincial governors and city mayors to announce detailed plans to implement restrictions that so far have been applied inconsistently.
Beijing's municipal government last year ordered its housing bureau to increase qualification checks of home buyers, including the number of homes owned by the families and how long they have paid social insurance in the city. It also doubled efforts to punish officials assisting unqualified purchasers.
A new cabinet, to be formed by Li when Wen formally hands over the reins at the National People's Congress, could feel it should act quickly to calm a market that has seen real estate prices soar 10-fold in major cities during the last decade.
Such measures might include higher downpayments and mortgage rates to curb speculation. That's what has unnerved markets, with the Shanghai Stock Exchange property share sub-index down around 7 percent since hitting a 34-month high earlier this month. The CSI 300 index <.CSI300> of top Shanghai and Shenzhen listings has followed a similar trajectory.
Investors fear home prices will overshoot expectations this year and invite tighter measures, such as raising downpayments to 70 percent of a home's value from 60 percent currently. Mortgage rates could increase to 1.3 times the benchmark rate for second-time home buyers from 1.1 times - as tipped in the market last week before the cabinet statement.
First-time home purchases are still encouraged in China, with 30 percent downpayment and a discount on mortgage loans.
A move by China's Ping An Bank <000001.SZ> this week to ban its regional branches from approving mortgages was seen by many bankers and analysts as a sign that Beijing was set to tighten controls on property to calm record prices.
"Given the political void until mid-March, the new policy looks to be more a goodwill political gesture by the outgoing administration than something that will really bite," said Xianfang Ren, an economist with IHS Global Insight in Beijing.
According to Liu Jianwei, a senior statistician at China's National Bureau of Statistics (NBS), housing inflation that picked up in the last quarter will taper off with quick and effective reinforcement of tightening measures issued over the past three years.
China had 236 million square metres of unsold homes at the end of last year, about three times last year's monthly sales. That is a reason for Liu to be confident about checking housing inflation. But IHS' Ren reckons three months' supply is very tight and leaves a risk of immediate price rises, with new tightening measures to follow imminently.
She added that if China failed to mop up liquidity, a decisive driver of home prices, "the housing market could run off the leash to the extent of careening the economy to the upside, yet unsustainable, track again."
China's home prices started to creep up again after the central bank cut interest rates in mid-2012 and injected liquidity to boost the world's second-biggest economy. New home prices rose in 53 of the 70 cities monitored by NBS in January from December. On average, they rose 0.7 percent - making eight straight months of upward movement.
In Reuters' weighted index, home prices were up 12.2 percent in Beijing and 10.8 percent in Guangzhou in January from a year earlier, returning to double-digit rises.
A Reuters poll in December showed economists expect house prices to rise 7 percent this year and 5 percent in 2014 on strong demand and a reviving economy.
The conclusion is clear, according to Lan Shen, an economist with Standard Chartered in Shanghai: "The government has not wrapped up its tightening policies yet."
(Additional reporting by Xiaoyi Shao; Editing by Dean Yates and Ian Geoghegan)