Late in September, we showed a viral surveillance video from inside new construction in east Hangzhou, which captured the sheer buying frenzy and panic, prompted by the new purchasing restrictions set to be unveiled just days later which would prevent people born outside Hangzhou from buying more than one property. 

The crackdown on China's latest housing bubble takes place as local home prices rose 9.2% in August from a year earlier, while in places like Shenzhen, prices soared almost 37%, in Beijing more than 23% and in Shanghai topped 30%. Such hefty price rises have been common all year in these so-called Tier 1 cities.

Now that the widely telegraphed restrictions have kicked, as expected China's housing market now appears set for a sharp pullback after several months of record pricing gains. As Reuters reports, a wave of restrictions imposed on housing markets in major Chinese cities last week have cut the area of new homes sold in places such as Beijing and Shenzhen by more than half. More than 20 cities have imposed measures, including higher mortgage downpayments, to cool hot property markets that have raised official alarm in Beijing and fresh concerns about China's ballooning debt.

Last week was a public holiday to mark National Day, traditionally a high season for property sales. Property agents said prices of new homes sold in the southern city of Shenzhen and in Beijing dropped 20 percent last week to entice buyers, compared with the previous week.

Beijing and Wuxi, a city near Shanghai, had no new launches last week, a survey of 10 major cities by property researcher CREIS showed. But the area of residential space sold, based on developments launched previously, plunged 86 percent and 72 percent, respectively, compared to the previous week. CREIS said cities including Shanghai, Hangzhou and Wuhan, launched new developments but the area put on the market declined more than 50 percent and the area sold dropped 35 percent to 60 percent.

"The new tightening measures are quite stringent," said Alan Cheng, general manager of realtor Centaline Shenzhen. "It's a blow to confidence and people are worried that prices will drop, so they are observing from the sidelines now." The latest restrictions varied from city to city, but included higher mortgage downpayments for second and third-time home buyers, in a bid to stem the flow of cash into the red-hot property market.

However, since this is China, where one zombie asset bubble dies (briefly) only for another bubble to be (re)born, at the same time as the housing bubble is set to pop, the local population has turned its attention to cars.

According to Bloomberg, Chinese passenger-vehicle sales surged a gargantuan 29% last month, led by small-car makers Geely Automobile Holdings Ltd. and Mazda Motor Corp., as consumers seeking to beat an expiring tax cut helped clear inventory on dealer lots. Deliveries of sedans, minivans, sport utility and multipurpose vehicles to dealerships rose to 2.27 million units in September, the state-backed China Association of Automobile Manufacturers said Wednesday.

Just like with the rush to buy housing ahead of purchasing restrictions, in the case of autos, consumers rushed to buy to take advantage of potentially expiring preferential tax terms. The government has so far stayed silent on whether it will extend a tax cut on purchases of vehicles with smaller engines beyond Dec. 31. As a result, sales could plunge next year if levies are allowed to double to 10 percent, said Cui Dongshu, secretary general of the China Passenger Car Association, a separate industry group. A slump in demand would worsen a capacity glut and dent profit margins, according to Steve Man, an analyst with Bloomberg Intelligence.

“The expiration of the current purchase tax cut is encouraging consumers to catch the last bus and bring forward their car purchases,” said Huang Xiaowei, an analyst with Shenzhen-based WAYS Consulting Co. “Dealers are preparing stocks for the surging demand at the year-end.”

The scramble to buy cars has left many carmakers with little to no inventory. A gauge of vehicle inventory fell for a third straight month in September to the lowest level in two years, according to the China Automobile Dealer Association. Dealers of Japanese brands in August saw profits increase by 27% from a month earlier to 1,851 yuan per vehicle after scaling back discounts due to strong demand, according to WAYS Consulting.

Mazda said its sales in China jumped 49 percent in September from a year earlier, led by models including the Axela compact, which qualifies for the tax cut. Geely raised its full-year sales target after September deliveries surged 82 percent from a year earlier.

Even General Motors' car sales, which had recently slowed in China, surged 16% to 343,773 units, with deliveries of Cadillac sedans increasing 63%. Great Wall Motor Co.’s sales rose 49 percent to 97,685 units, with SUV deliveries reaching 87,627 units.

What happens should both the housing and car bubbles pop? Well, buy stocks (again) or (even more) bitcoin, because in China, where the total amount of bank deposit is in the mid-$20 trillion range, the bubbles never actually die, they just get recycled.