Back in early 2014, we warned that the Chinese housing bubble has burst, promptly followed by official confirmation by China's National Bureau of Statistics which showed that in the subsequent several months Chinese home prices and transactions plunged. Since then, however, China - whose economy has been on a steep downward spiral - has desperately scrambled to reflate this most important to its economy bubble, because as a reminder in China three quarters of all household assets are in Real Estate...

... despite first suffering the bursting of a shadow debt bubble and then its stock market doing the same.

Still, because in China where there is an excess $30 trillion in closed liquidity (due to China's closed capital account and outbound capital controls) it has long meant that all that happens when one bubble bursts, is to create another asset bubble, which then bursts and the original bubble is again reflated.

Which is precisely what has happened to China's housing where we can now officially say that the bubble is back...

... if only however in the first-tier cities. In fact, according to the latest data, the bubble among China's top, or "Tier 1" cities has never been bigger entirely at the expense of all other cities.

According to the latest NBS new home price update, in November the first-tier plus Xiamen were 55% of the national price increase, with Shenzhen nabbing 22% of the total national increase the Investing in Chinese Stocks blog reports. In December, those numbers were 54% and 23%, almost no change. In January, the first tier and Xiamen accounted for 52% of the total increase, with Shenzhen alone accounting for 21%, rising 4% mom. In the past year, prices are up an average of 1% nationally. Shenzhen alone is 74% of the total increase yoy. The first-tier plus Xiamen accounted for 141% of the total increase, or without those 5, prices fell 0.4% yoy nationally across 65 cities.

But nowhere is the return of the Chinese housing bubble more obvious than in Beijing where scalpers are charging up to ?3000 for service numbers at the government office where property transfers are recorded, due to long wait times in the wake of the recent transaction tax cuts launched by the government to spur the housing market.

Courtesy of the ICS blog, we get the following translation of what is taking place on the ground in China, where the current bubble du jou has sparked a veritable house-flipping mania:

Transaction Tax Cut Spurs Bubble Activity in Beijing: ?1000 For Reservation Number The specific policies to Beijing, but later than 140 square meters of the only family housing, deed tax increased from 3% to 1.5% of the total housing fund. It does not look great, but the effect was particularly evident. ...According to data center statistics, in the first week (February 14 to February 20) after the Spring Festival, Beijing new home net signed volume of only 1006 sets. The secondary residential net signed volume is as high as 6048 units, average daily turnover of 864 units, the highest trading volume since 2010. From the price perspective, the average transaction price 41,490 yuan / square meter, compared with 2015 annual average price rose about 5%. ...The new policy to the owners and customers have brought mental changes, including the owners of more brewing prices. Xiao Gu said in Beijing many owners are selling the house for a house, he wants to buy a house prices, he will increase his selling price, eventually leading to a chain reaction.

This has resulted in some bubbly behavior: paying for a reservation number:

Now that the volume is large, the transfer of more people, so the reservation number is quite difficult. Due to the large number of people go through, on behalf of the reservation business is also booming. Taobao, enter the word Beijing transfer agent may be seized several shops in this business. In some shops turnover ranking, monthly volume of dozens, mostly ordinary numbers in the thousand or so, the price is even higher if expedited. In a shop, the owner drying out a series of successful single theme, saying last week, supplied a total of 168 successful reservation number, each priced at 999 yuan, if you need a specified time the price increases by 499 yuan. Online news says that there are already scalpers charging ?3000 for a number this week, ?1000 for next week.

IICS then lays out another example of the house-buying frenzy in Beijing, first described in Ifeng:

Last week I posted one example of bubble behavior in Beijing, as people paid up to ?1000 for a service ticket in order to avoid wait times at the property office. Transaction Tax Cut Spurs Bubble Activity in Beijing: ?1000 For Reservation Number Now another example emerges as sellers are throwing out high opening prices. It begins with a sale in Daxing, an outer suburb of Beijing, which saw a property sell for ?47,000 per square meter, followed by news that Vanke had hiked prices on all its projects in Beijing; the company denied the report. The latest news says ?3 million yuan is now the "opening price" for homes that are not too far outside the city. Analysts are more conservative in their estimates, projecting an increase of 5% to 10% in 2016, and say these high prices may be artificial. Still, even if that is true, it reflects an attempt by sellers to cash in on the current mood which increasingly bears the hallmarks of speculative fervor. After Spring Festival, prices in the East Fourth Ring increased ?4,000 to ?5,000 yuan per square meter, or about 10%. The average price hike in the city is about ?1,000 per sqm. One property near Jinsong subway station (between Guomao and Panjiauan on the 10 line) sold for ?1.8 million before this year, now a similar property is listed for ?2.1 million. The transacted price will be closer to ?1.9 million according to analysts, reflecting the ?1,000 per sqm rise in price.

This behaviour is confusing to our friends from IICS:

I can understand someone wanting to pay to skip at the hospital, but waiting a few days to transfer a property? One reason someone might want to do this is if they fear rising prices. Chinese buyers and sellers will sometimes back out of a transaction if the market moves against them. In this case, if you bought a property before the tax was announced, the seller might try to claw back some of the tax savings. It may also be the case that, as in other situations, wealthier people would rather pay than wait.

To us, there is nothing surprising in this behavior: now that the Chinese stock market bubble has burst, the local population has to find a new asset class which to chase for the next few months, and for the time being that asset is housing; and since the politburo gets to boast that the Chinese economy is "improving" as a result of this scramble, no "macroproudential brakes" will be deployed before it is again too late, the bubble bursts, and all the excess money has to rotate into another bubble du jour. Unless, of course, by then China's capital account has been fully liberalized and those $30 trillion in Chinese funds can finally chase global assets without the detrminet of even a token capital control firewall.