Naysayers on China wanted everybody to believe that its property market would have gone pop by now. Investors who ignored them will be glad they did. Shares in Chinese property developers have made the biggest gains in Hong Kong this year, returning as much as 80 per cent against 25 per cent for the benchmark Hang Seng index.

Those returns are impressive considering that Beijing has not budged from its pledge to curb property prices. But then the value of house sales has still grown 10 per cent this year. It is only recently that unit prices have started to fall – now down a 10th from August peak. Even so, those price falls and lower interest rates helped sales volume to jump 30 per cent in November from last year.

This sales growth has helped developers to reduce stock, but it is the lack of price appreciation that is squeezing all but the strongest. As the price boom comes to an end, falling margins and high leverage have left developers facing returns below the cost of capital. Debt-to-equity ratios are more than 70 per cent and short-term liabilities are up sixfold since 2006, according to Barclays. Little wonder that Greentown, a developer, was forced to raise HK$5bn from its shareholder Wharf this year.