The new Beijing real estate regulations are the harshest in the country. The most noteworthy new rules may be the restrictions on non-Beijing residents and the limiting of Beijing families to a total of two houses. Expect a cottage industry to develop around fake divorces, fake marriages to poor Beijing residents, and “renting” of Beijing residents’ identity cards to allow people to exploit loopholes and buy property.

Beijing real estate is expensive, in part because it is a national and to some extent international housing market. Rich people from all over China buy property here, as Beijing is the center of power and has the best education and health systems in China. Many in the global Chinese diaspora have also purchased homes in Beijing. Apparently the rules for foreigners buying residential property have not changed; foreigners can still buy one home if they can prove they have worked or studied in Beijing for more than a year.

These new measures will impact the housing market, though many analysts are not convinced prices will drop. Most believe transaction volumes will dry up and rents will increase. If the government keeps these new rules in place for a significant period of time, rather than retreating in the face of pressure from the real estate lobby or a significant economic slowdown, some developers may feel enough financial pain that they will have to cut prices to generate cash. The recent restrictions, which do not appear to apply to commercial and retail space, may drive up prices for commercial property, as in these inflationary and uncertain times people still want to own real estate as a hedge.

The social and political implications may be even more important than the economic ones. Forget the much discussed hukou reform; between these new housing rules and the recent rush hour restrictions on cars not registered in Beijing, Beijing has explicitly reiterated that non-Beijingers are second-class citizens.

The car and real estate restrictions also reflect Beijing’s environmental dilemma. Beijing is desperately short of water and the population of approximately 20m is dangerously straining the transportation, education, health and sanitation infrastructures. Beijing planners are trying to construct new communities outside the city center but they can’t build them fast enough. Imagine trying to upgrade an overloaded 1950s propeller plane into a 21st century jet airliner, while flying, and you can partially understand Beijing’s challenges as it tries to fulfill its goals of becoming a world-class city.

As I joked on Twitter a few days ago, Beijing is now so prosperous that you are not allowed to buy cars or real estate.

For most Chinese at least, it seems Beijing’s motto is becoming less “Beijing Welcomes You” and more “Beijing for Beijngers.”

For more frequent China-related updates you can follow me on Weibo @billbishop and on Twitter @niubi.