Data on 70 Chinese cities released by the National Bureau of Statistics and analyzed by The Wall Street Journal show average home prices declined by 0.17% in November compared with October, compared with a 0.13% decrease in October and a 0.01% increase in both September and August. Prices rose 2.3% on average in November from a year earlier, moderating from a 3% increase in October.

Prices of newly built homes in major cities such as Beijing, Shanghai, Shenzhen and Guangzhou—often described as China’s first-tier, or most developed, cities—were marginally lower compared with October, the statement said.

Analysts said that while the central government has shifted its priority to supporting economic growth from combating inflation, it remains set on controlling property prices. The People’s Bank of China cut banks’ reserve-requirement ratio by half a percentage point effective Dec. 5, helping ease liquidity in the country.

There are predictions that the prices will drop further due to the slowed economy. Business Week adds:

Chinese developers will face challenges over the next 12 to 18 months including slowing sales, tight bank credit and downward pressure on prices and profit margins, Moody’s Investors Services said in a Dec. 15 report.

The government may ease its property measures in the second half of next year if home prices in major cities include Beijing and Shanghai fall 20 percent from their 2011 peaks, according to Mizuho’s Shen. Shanghai’s new home prices gained 2.4 percent from a year earlier in November, and those in the capital city added 1.3 percent.

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“It has become ever clearer that the Chinese economy is moving to a soft landing,” Zhu said. “The Chinese economy today is really moving to an inflection point, moving to more services and capital-intensive economy.”

Zhu and Fan, speaking on the same APEC panel, said economic expansion would slow from the 9.1 percent growth in the third quarter of this year, with Fan saying sustainable growth in gross domestic product was about 8 percent. Their forecast for a soft landing is in contrast with some observers including hedge fund manager Jim Chanos, who has forecast since at least February 2010 that the property market will slump, saying that China is on a “treadmill to hell” because of its reliance on real estate for growth.

“We must be firmly committed to maintaining growth and promoting stability, with a special emphasis on ensuring strong growth in order to add momentum to the economic development in the Asia Pacific and beyond,” Hu said. China will “focus more on increasing imports while maintaining a stable level of exports.”

See also: Real Estate Prices Tumble as China Government Tries to Contain Bubble via CDT.

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A man holding a bucket was seen walking out of the office of Shenzhen Luosha Engineering Development Co, a real estate firm that will build a new project at the complex. The man poured something from the bucket into apartment windows, a witness surnamed Li told the website. Li later found the street was crawling with scorpions, the report said.

Police and residents spent the whole night capturing nearly 50 kilograms of scorpions.

All the apartments are scheduled to be demolished but home owners haven’t signed compensation deals yet, the report said.

Residents told the newspaper they suspect the developer freed the scorpions to drive them out as some buildings have already been torn down due to a tight schedule.

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The trial tax, the closest thing yet to the style of tax levied annually on residential property in countries like the U.S., will be applied differently in Chongqing and Shanghai, apparently to see which one works best, before being rolled out across the country.

The tax comes after the country’s cabinet on Wednesday raised the minimum down payment on second-home purchases to 60% from 50%, and imposed limits on home purchases as part of efforts to cool the overheated real-estate sector and rein in inflation.

“The tax, by itself, is not very harsh. But together with the new limits on home purchases and higher down payment for second homes, it shows the government is determined to rein in speculation,” said Remy Chan, managing director of CBD Commercial Investment Management, a 3 billion yuan ($456 billion) private-equity property fund in Shanghai.

The tax, which comes into effect Friday, “can guide residents toward more rational housing consumption,” the Ministry of Finance said Thursday in a statement issued jointly with the Ministry of Housing and Urban-Rural Development and the State Administration of Taxation.

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All around the nation, giant state-owned oil, chemical, military, telecom and highway groups are bidding up prices on sprawling plots of land for big real estate projects unrelated to their core businesses.

“These are the ones that have the money to buy the land,” says Prof. Deng Yongheng at the National University in Singapore. “Because in China, it’s the government that controls the money supply and the spending.”

By driving up property prices, the state-owned companies, which are ultimately controlled by the national government, are working at cross-purposes with the central government’s effort to keep China’s real estate boom from becoming a debt-driven speculative bubble — like the one that devastated Western financial markets when it burst two years ago.

Land records show that 82 percent of land auctions in Beijing this year have been won by big state-owned companies outbidding private developers — up from 59 percent in 2008.

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New measures introduced in the past few weeks restrict mortgage lending, increase land supply and stop developers from hoarding apartments to push up prices.

In the biggest cities like Beijing and Shanghai, prices have risen so much that for many people most properties are now unaffordable.

But analysts say house prices are unlikely to fall this year, despite the tightening measures adopted by the government.

Last week the annual report on the state of the real estate industry by the Chinese Academy of Social Sciences warned that rocketing house prices had become the most important obstacle to that sector’s healthy development.

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China is drawing up a new curb on property developers as part of a host of measures to cool the country’s red-hot property market, the state-controlled China Securities Journal reported Thursday.

The plan would ban developers from investing revenue from pre-sales of uncompleted property developments in new projects, the journal said, citing an unnamed source close to the Ministry of Housing and Urban-Rural Development.

Developers will be required to deposit the income from such advance sales of uncompleted projects into a special account monitored by the government and will only be able to use the money to pay contractors.

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China’s real estate rush, once confined to a handful of leading cities, has spilled into the hinterlands with a ferocity reminiscent of American expansion into exurbs like the Inland Empire.

In a country that economists say is treading dangerously close to a full-blown property bubble, Hefei represents more evidence of China’s headlong embrace of housing to power economic growth.

“The situation in Hefei is a symbol of the craziness in China’s real estate market,” said Cao Jianhai, a professor of economics at the Chinese Academy of Social Sciences, a government think tank. “Prices in second- and third-tier cities are increasing more dramatically than in the first tier. It’s very dangerous and it puts local banks at risk.”

With land increasingly difficult to secure in the most coveted cities, developers are turning to lesser-known destinations in China. Local officials eager to generate revenue through leases and development fees, and to meet growth targets set by the central government, are quick to grant permits.

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China on Tuesday tightened rules on advance sales of new property developments, in the third move of its kind in less than a week aimed at curbing rampant real estate speculation.

The Ministry of Housing and Urban-Rural Development said in a notice on its website that developers cannot receive down payments for unfinished properties without first obtaining government approval.

Once the government gives developers the green light to pre-sell properties, they must publish the prices of each unit in the development within 10 days of receiving approval, the ministry said.

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This is the Chinese economy in a nutshell–sellers selling a product for which there’s no natural demand, buyers buying whether they need it or not. In a market boosted by government-directed lending, both sellers and buyers have been getting only more ambitious and frenzied.

For the seller, at least, this is perfectly rational. To not get in while the economy is hot means missing easy profits. Even as Zhang the Cambridge-educated leftist argues the real estate bubble is disserving the nation, Zhang the Wall Street-trained executive can argue reasonably that not participating in it would be disserving her shareholders. Sales at Soho China nearly doubled last year to $2 billion.

As Zhang wonders where her country is heading, the tycoon is at the peak of her capitalist career, 15 years after she cofounded the company that became Soho. Fifteen years from now, will Soho China’s many skyscrapers in the Beijing’s skyline be admired? Or will they be scorned as icons of short-cut capitalism, built cheaply and sold for piles of cash to mining magnates and corrupt officials?

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