Speculation that the city government might place limits on the trading of unfinished apartments has created a panic selling spree over the past week, according to local real estate agents.

　　Last week, Shanghai government spokeswoman Jiao Yang announced local authorities are working on regulation concerning the transfer of unfinished apartments as a way to slow rapidly rising housing prices in the city.

　　"After the news was released, our outlets have seen some 40 percent more unfinished apartments registered for sale," said Hu Juying, senior manager of Stanford Residential Property Services. "Unfinished apartments now account for half of our business. In some newly developed residential areas, the proportion of unfinished apartment for sale is as high as 80 percent."

　　Stanford has ceased accepting unfinished apartments for sale until the situation becomes more clear.

　　"When details remain unclear, we try to reduce risk," Hu said.

　　With housing prices in the city rising rapidly - 30.7 percent during the first 11 months of this year - many local investors have taken to buying unfinished apartments and then turning them over at a higher price after a few months.

　　Typically, property developers in the city begin selling units long before they are completed - sometimes as much as two years - in order to free up capital for other projects.

　　But the government says speculators are pushing up housing prices, which are already beyond the reach of many working families. Thus the new regulation, which some real estate agents fear could go into effect by the end of this year, although the government hasn't announced a timetable for the proposal.

　　Some agents that used to buy apartments and sell them for a profit have stopped the practice out of fear new rules could drag down prices.

　　In fact, prices for purchased uncompleted apartments are already falling in some parts of the city, as investors dump the homes before any new rules go into effect, said Wang Jun, marketing manager for Century 21 China.

　　Investors in some projects in Hongkou District are already finding it tough to cash out.

　　"Many investors have come here to confirm the news. If the policy is published, it could be a fatal blow to some property investors," said Wang. "Those who buy apartments with a mortgage will find it hard to pay back the bank."

　　According to the Shanghai Statistics Bureau, 16.6 percent of all apartments purchased in the city are bought as investments, not homes. That number rises to 39 percent for apartments priced above 7,000 yuan per square meter.

　　New regulations could also leave developers struggling with cash-flow problems, according to some agents who say few buyers are willing to purchase unfinished homes until the government announces its plans.