New taxes take the shine off Chinese real estate -- shares plummet in HK and Shanghai

In Asia Tuesday, shares closed lower. The Shanghai Composite Index lost 0.9%, closing at 3,274 and in Hong Kong, the Hang Seng Index was down 1.3% at 21,814. Japan's Nikkei 225 Index shed 0.2%, ending the day at 10,083.

In China, declines were led by property developers as investors reacted to the government's reinstatement of property taxes for homes sold within 5 years of purchase. Prices for residential homes in China's 70 largest cities spiked 5.7% in November alone, and fears of a bubble are seeming more and more likely to be realized. "We have modest real estate bubbles that are emerging, but they are really at a very early stage," Prasenjit K. Basu, Chief Economist at Daiwa, said on CNBC this morning. But some say the tax of 5.5% will not dampen consumer enthusiasm.