Visitors look at the model of a housing project at a recent housing fair in Hangzhou, capital of East China's Zhejiang Province. 

In a drive to prevent"hot money" flowing into China, the government is likely to issue a set of measures"within days" to check overseas investors' purchases of mainland property.

"The measures will come this week, probably at the end of the week," a source familiar with the situation told China Daily.

Another source, who has wide connections in Beijing's property market, also expected the regulations to be issued imminently, unless favourable figures are released, showing recent measures aimed at cooling the property market are driving"hot money" out.

Government sources were not available for comment last night.

The rules, to be issued by the State Administration of Foreign Exchange and other ministries, seem necessary after the mainland registered a 31.3 per cent growth in fixed-asset investments between January and May. Property made up the bulk of the growth.

The move would follow a raft of cool-down measures issued by the government in May.

The measures included an increase in the down-payment ratio and a tightening of credit rules to slow down rampant investment in the high-end property market and boost the supply of low-cost houses.

"This round of tightening policies are tougher than last year's," said Liao Qun, an economist with Hong Kong's CITIC Ka Wah Bank.

"And more austerity measures are on the cards if the situation does not improve," he added, stressing his comments did not refer to a check on international funds.

However, the mainland's senior officials recently said rules to check international funds flowing into China's property market are being discussed and drafted.
 
Last month, Lin Zheying, deputy director-general of the Ministry of Commerce's foreign investment administration, was quoted by Bloomberg saying new rules defining what type of overseas investors can buy property could be announced that month.

A Xinhua report in April also said the People's Bank of China (PBOC) would strengthen supervision and control over the flow of "hot money" from overseas into the property market in some areas.

Li De, director of the Finance Risks Division of the PBOC Research Bureau, said a great amount of foreign funds had flowed into East China's housing market, partly in speculation of a further appreciation of the yuan.

Hong Kong newspapers said regulations may include tightened approval procedures and a register of purchases made by overseas citizens, as well as a limit on the number of properties they could buy and time restrictions on resale.

The regulations, if implemented, will dampen overseas investors' passion for mainland properties, said K.K. Lai, a director of Hong Kong's leading property agency, Centaline.

The agency last week released a survey saying Hongkongers have purchased 8,800 residential units on the mainland in the first half of the year, with a total value of 4.7 billion yuan (US$603 million)  a year-on-year increase of 11 per cent.

In recent years, international funds have also invested heavily in the mainland property market.

Morgan Stanley has purchased five luxury projects in Shanghai since 2004, investing more than 2 billion yuan (US$250 million).

JP Morgan recently set up a US$4.2-billion international property fund, which mainly invests in international property markets, with the Chinese mainland being a major target.

Editor: Yan