Authorities forced real estate agents to shut down after house prices in this Chinese province doubled in a day

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Asset bubbles in China are nothing new, but this one is exceptional. At least in terms of how fast it happened.

Just two days after announcing a scheme to set up a special economic zone in the northern Chinese province of Hebei, modelled upon a similar scheme established in Shenzhen in the nation’s south in the 1980’s, Chinese authorities have forced real estate agents in the province to shut their doors to stop a stampede of buyers looking to buy property in and around the region.

Citing a report in the Global Times newspaper, Reuters noted that on Sunday, just a day after the government plan was announced, average apartment prices in the region had almost doubled.

Doubled in just one day.

And you thought house prices in global cities such as New York, London and Sydney were rising fast.

“Hotels were full and residents complained about traffic jams as out-of-towners from Beijing and beyond descended on the area 100 kilometres southwest of the capital,” said Reuters, citing the Global Times report.

With speculators bidding up prices at a rapid pace, authorities took the unusual step of closing real estate offices by Monday in an attempt to quash the frenzy.

“Worried about runaway prices, the government slapped an emergency ban on property sales in Xiongxian and Anxin counties, forcing real estate agents to shut and frustrating would-be investors,” said Reuters.

“Officials took to the streets to blast warnings through loudspeakers against illegal speculating.”

Despite the crackdown, not everyone appears deterred, simply spreading their search zone for prospective properties to provinces where restrictions are yet to be implemented.

“A couple were in Anxin checking out property after driving from Tangshan, about 250 kilomteres east of the new zone,” said Reuters. “Even if they can’t buy in the new zone, they will extend their search to nearby areas, the wife said.”

Others, such as Chen Bo, a 32-year-old worker from Beijing, said that the flurry of speculative buying had made him too excited to sleep.

“This is like pie falling from the sky,” he was quoted as saying in local media.

And who could blame him and others for being excited by the government’s plans to establish a new economic turn in rust-belt province, particularly given the scale of the property price increases seen in Shenzhen in recent years.

They’ve skyrocketed, much like other major cities along China’s eastern seaboard in the latest housing cycle, fuelled by cheap credit, a lack of alternative investment opportunities within China and tighter restrictions on capital flows exiting China for abroad.

Tougher restrictions on home purchases in many major cities, done in an attempt to cool rapid house price growth since mid-2015, may also be exacerbating buying pressures in other centres such as those witnessed over the weekend.

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