Recurring cycles

That's why she sold a small apartment, 46.6 square meters, in Changning District, in late March. She sold it at 1.16 million yuan, taking a 78 percent profit on a 10-month holding.

The cycle theory indeed seems to be the trend. Prices skyrocket, the government intervenes with curbs, prices drop, and then buyers rush in, starting the cycle anew.

The global financial crisis actually helped encourage property buying, including speculation, in China in 2008, when the government rolled out stimulative measures to buffer the effects of a downturn.

The latest brakes on home lending have sent the strongest signal to date that the government is serious about cooling the red-hot real estate sector before it bursts and causes widespread collateral damage. But the curbs have taken their toll on an emerging middle-class eager to improve its living standard.

Many of my friends born post 1980 in the one-child generation are complaining about the difficulties of buying homes. Bank loans are the key to home ownership for most people in that age group.

In April, banks extended 8.31 billion yuan in individual home mortgages. At the same time, new home sales that month were valued 23.4 billion yuan. The transaction value for second homes wasn't published.

Huang Sunzhe is caught in the net. He's 30 and earns about 20,000 yuan a month. He already took out a mortgage to buy himself an apartment in the Putuo District, preparing for the day when he marries and starts a family. But now he wants to buy a bigger home for his parents, and he can't get a cheap mortgage because he's considered a second home buyer.

Of course, his parents could sell their existing apartment to raise money for a down-payment on a bigger place, but they can't do that until they find a new home to move into. For them, it's a Catch-22.

The government has increased the tax sellers pay on property transactions, hoping to discourage speculation. The general public may be hoping that the tax helps bring home prices down, but history tells us that the additional costs simply get passed onto buyers.

So when there is speculation that China is mulling a new property-ownership tax to drag down prices, I really doubt whether the home sellers will take their old practice again - shifting the tax burden to buyers.

Economists said that China's real estate prices will rise further in the long haul on increasing urbanization.

They said there are several drivers to support the real estate sector for long-term prosperity.

Firstly, real estate is still China's pillar industry. Secondly, banks are unwilling to see rising defaults. Besides, home owners feel good when waking up overnight to find their home's value has grown.

"Home prices may correct 10 percent to 15 percent on average in China nationwide on the latest cooling policy," said Chen Xingdong, managing director and chief economist at BNP Paribas Securities (Asia) Ltd. "The short-term correction will pave way for future long-term rises." And in the business of property speculation, it seems it's always the sellers who have the last laugh.