China's property boom tested

The billboards that line the road from the airport to the center of this metropolis in China's southwest proclaim as soon as you arrive that the country's property boom has spread firmly to the interior.

Touting housing developments like "Venice Impression" and "Dream Town," they are as ubiquitous as the cranes and frames of high-rises covering the hills on the outskirts of this gateway to the west, which not long ago were only dotted with villages.

Once a scene reserved for eastern cities like Beijing and Shanghai, they testify to a transformation overtaking China's second-tier cities, as investment in factories and infrastructure brings in jobs and raises incomes.

"Chongqing's property market right now is a lot like Hangzhou's five or six years ago, only without the same kind of bubble Hangzhou went through," said Lian J H Ye from the Chongqing office of property consultants DTZ Debenham Tie Leung.

Hangzhou, and its close neighbor Shanghai, came under the spotlight for rampant property speculation that sent prices soaring. Beijing responded with a raft of cooling steps, including levying capital gains taxes on homes resold within a short period and higher down payment requirements.

Ye thinks Chongqing will be spared a similar fate because its market took off after the lessons from Shanghai had been learned.

A lot is riding for the world economy on whether he is right.

More here.