Shanghai Property Back in Vogue

A government clampdown on construction of luxury apartments is combining with loose enforcement of limits on property investment by foreigners to send Shanghai property prices sharply higher after two years of stagnancy. The Shanghai government increased the tax on property sales in early 2005, following nearly three years in which hot money, looking to benefit from China's booming economic growth and a then-anticipated increase in the value of the yuan, poured into the luxury real-estate market. The stream of funds caused the price of some luxury apartments to soar. Since the tax increase was implemented, such prices have barely kept pace with inflation.