HEFEI, China: In 2016, Hefei, a manufacturing hub of about 8 million people in China's east, was one of the world's hottest property markets and a prime target for price curbs designed to knock speculative heat out the sector.
Analysts say restrictions introduced last year and subsequent rhetoric from policymakers should have sent a very clear signal to investors that authorities would tighten further in Hefei and elsewhere.
Instead, speculators in Anhui's provincial capital are betting just the opposite - that the government will ease curbs to support growth.
Investors like Zhou Xiansheng say they are in no rush to sell their holdings.
"Prices have only gone up in the past... The government will not let the market correct as long as property is still the pillar of economic growth," said Zhou, a businessman who owns multiple homes in Hefei.
Analysts say such views, based on observations of past cycles, are a major miscalculation of government intent and that future curbs will be harsher than previous measures, bad news for highly-leveraged investors.
Nowhere else in China are speculative forces more apparent than they are in Hefei. Last year, new home prices rose 48.4 percent, the fastest rise in the world, according to a report by China's Hurun Research Institute and real estate agency Global House Buyer.
With home prices hitting records, policymakers have been rolling out restrictions.
Sales and price growth in Hefei - one of 16 cities slammed by curbs since October - have slowed, hitting speculators who had made up more than 80 percent of its market at the height of last year's buying frenzy.
But investors appear less easily frightened than they were in the past: a recent poll by local property commentator Zhang Xian showed only 21 percent of the total 5,036 people surveyed believed Hefei prices would fall this year.
China's "seesaw" approach over past three major cycles of property tightening - capping price growth when a boom becomes too concerning and releasing the brake quickly to prevent a market collapse - has cemented the bullish mentality of investors seeking to reap big profits over a short period of time.
"I'd buy another one if I could," said Duan, a Hefei local who just bought a house in the city and who only gave his family name.
Elly Chen, a Hong-Kong based property analyst at Nomura, notes in past cycles, the government only began to relax curbs once prices started falling.
"The government is definitely willing to let prices fall," said Chen.
Property consultancy Centaline's research arm said upward market momentum in the hottest cities, including Hefei, is yet to be contained, based on its sales figures for January and February.
"If it persists, the government will be pressured to tighten credit," Centaline said in a Reuters poll conducted in late February.
Analysts say the signals from political leaders are unambiguous. In uncharacteristically pointed remarks made in December, Beijing's new mayor, Cai Qi, said that prices in the Chinese capital will not rise this year but stopped short of outlining any new curbs.
And Chinese President Xi Jinping last week singled out property market stability as one of the key policy areas to focus on this year.
China's historic pattern of tightening and easing measures has been designed to avoid prolonged corrections such as those seen in Japan in the 1990s.
But last year's furious price increase in the nation - the fastest since 2011 - and speculators' resilience to curbs underscored the urgency to implement alternative measures.
Establishing a long-term mechanism is Xi's priority in 2017 as he looks to promote the healthy development of the property market, based on the belief that "houses are for living in, not for speculating", though details have been thin.
China has for years mulled a property tax, which could deter speculation in real estate, though little progress has been made due to resistance from local governments who rely heavily on land sales for revenue.
In 2012, China was close to expanding a property tax trial from two to 10 cities, says Joyce Man, professor of economics and public policy at Indiana University, who worked with government officials to study the implementation of the tax and prepare for the rollout.
While the process of introducing a property tax would be politically challenging - and arguably more difficult now than it was in the past - analysts say the case for such a policy is growing.
"China was very close to moving forward on property tax reform, but they've lost momentum and the political will until very recently," Man said.
"(There is a) newly-found urgency due to sky-rocketing housing price in big cities." - Reuters