Throughout March, Chen Lei's telephone did not stop ringing. A real estate agent in Shanghai's Songjiang district, a section of the city bursting with new property developments, he could barely keep up with the inquiries from would-be buyers.

For the past 10 days, the phones have been crazy again but this time the questions are different. “We have had lots of calls from buyers who ask us if they can cancel the deals they have made,” he says. “They think they will be barred from getting a mortgage.”

Over the past two weeks, the Chinese government has been rolling out an aggressive campaign to squeeze speculative buyers out of a property market that many analysts fear is close to a bubble. Almost every day a new administrative measure has been announced – raising the required deposit and interest rate on mortgages for second homes, telling local banks to avoid lending money for third homes and making it harder for people not resident in a city to get a mortgage there.

State media reported yesterday that the government was imposing a moratorium on real estate companies raising new money in the capital markets. Instead of raising interest rates for the entire economy, the government is trying to use myriad planning controls to micromanage a controlled cooling of the housing market.

The initiative is crucial for the economy. A soft landing for a bubbly housing market could help underpin the rebound in the economy in the medium-term. But if the policies have little impact on prices, forcing the authorities into harsher measures, or if they cause the sort of slump that followed a similar crackdown in 2008, then growth will take a big hit.

Although house prices have been rising strongly for months, the government has been spurred into action by strong indications that the market became particularly frothy over the last quarter. Property sales rose by 90 per cent in March from the month before, according to Beijing-based consultancy Soufun. According to Standard Chartered Bank, land prices soared 170 per cent in the first quarter, year on year.

Leverage also appears to be increasing. The central bank reported last week that mortgage loans were equivalent to 66 per cent of the value of housing sold in the first quarter, up from an average of 34 per cent in 2003-2009. Meanwhile, the rising cost of housing has become a hot-button political issue in many cities.

It is uncertain whether the measures will succeed. Most are aimed at slowing purchases of second homes and their impact will depend on just how much speculative buying there has been in China.

Brokerage CLSA concluded recently that 22 per cent of purchases were investments. However, He Liping, an academic at Beijing Normal University, estimates that in recent months that figure has jumped to as many as 70 per cent of buyers.

There is also a psychological aspect. By announcing new measures almost daily, the authorities are trying to convince would-be investors that they are really serious.

Some economists believe the government's micro-measures are missing the point. Andy Xie, a Shanghai-based economist, argues that the root cause of speculation is negative real interest rates, which forces savers to look for different ways to invest their money. As a result, only higher interest rates for the economy will slow property investment.

Yet, the panicked phone calls to estate agents suggest that the avalanche of new policies is having an impact. “Sales in first-tier cities have obviously dropped,” says He Fan, an analyst at Soufun.

Indeed, the fear among some analysts is that the measures will work too well and that once prices start to fall, it will be difficult to stop them. Some observers are forecasting 20 per cent price drops in the big cities. If that happens, Beijing will be under pressure to micromanage a rebound.