The stock and property markets are like the two scales of a balance: when one goes up, the other comes down. The reason for that is simple: since the amount of money and channels of investment both are limited, a flow of funds into stocks usually means a dry weather for the property market, and vice-versa.

This is true of all economies. But in China, the two markets can also "co-exist peacefully". In fact, they fuel one another. And at present, both the markets are sizzling to say the least despite all the steps taken by the government to rein them in.

The constant flow of money has already pushed up the Shanghai composite index by about 50 percent this year. And despite the government raising the bank reserve ratio and interest rate several times to mop up excess liquidity in the market, the index still climbed above 4,000 points in May from 2,715 on January 4.

Correspondingly, Beijing's real estate sector is also roaring ahead in spite of the government's measures to cool it down.

National Statistics Bureau data show housing prices in 70 major cities of the country rose 5.6 percent in the first quarter of the year, with Shenzhen taking the lead with a 12.6 percent increase. Beijing ranked third with a 9 percent rise.

A highly bullish stock market does divert some money from the property market, according to leading property brokerage firm 21st Century. "More pre-owned houses have been on sale recently because their owners are eager to sell them off and cash in on the bullish stock market," says a 21st Century source in Shanghai.

The number of pre-owned houses on sale in Beijing jumped 19.3 percent in April over the previous month. In Shanghai, it rose 9.6 percent. It's a different matter that the average price in the two cities increased by 0.4 percent and 0.3 percent, too.

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"Given the quick return from stock market investment, people who want to buy a house mainly to improve their living condition defer their plan to do so temporarily," says 21st Century research department analyst Meng Qi. The reason for that is simple. They want to make more money so that they can buy an even better house. "Those who plan to buy a house to move into after marriage or to shift immediately, however, seldom change their plans."

In contrast, the sale of new houses in Beijing in April dropped 14.9 percent year-on-year, according to Beijing Property Transaction Management's website.

Head of Residential Industry Association of the All-China Federation of Industry and Commerce Nie Meisheng says: "The ever-increasing stock benchmark will weigh on China's property market, especially on the markets that see strong investment initiatives." The impact on Beijing's property market, however, will be limited because only one-third of the property bought in the city is for investment purposes.

But again, when funds start flowing into the bourse, it prompts an increasing number of people, who have already made money from stocks, to turn their eyes towards the property market. Wan Qian, a 38-year-old executive, is one such person. She has bought three apartments - in Beijing, Wuhu and Xi'an - in the past 10 months.

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