• Visitors view architects' models of apartment blocks during the 2007 Xian Autumn Real Estate Trade Fair on Oct. 26, 2007 in Xian of Shaanxi Province, China.

Visitors view architects' models of apartment blocks during the 2007 Xian Autumn Real Estate Trade Fair on Oct. 26, 2007 in Xian of Shaanxi Province, China. (Photo : Getty Images)

China's housing ministry has lauded the arrest of real estate agents accused of "spreading false rumors" of new restrictions on home purchases in Shanghai, which helped fuel a buying frenzy and a wave of divorces in August.

Shanghai police have detained seven property agents for "intentionally" spreading rumors to influence the housing market and boost their earnings, according to the police's official Sina Weibo account.

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According to the rumors, China's central bank will raise mortgage downpayment requirements and benchmark interest rates for those who had been divorced for less than a year starting Sept. 1. It led to a spike in prices and sales volume as homebuyers scrambled to lock in mortgages before the supposed regulations took effect. The rumor also incited a surge of divorces late last month as couples sought to sidestep the new regulations. Shanghai laws forbid migrants who lack a Shanghai residence registration from buying homes unless they are married, with houses limited to one per family.

In response, the Ministry of Housing and Urban Development endorsed the arrests over the weekend and warned of blacklisting agencies found to be spreading rumors or, in the case of severe violations, shutting them down entirely.

"This kind of rumour misleads consumers, disrupts market order and has a vile social influence," the ministry said on its website.

"We will increase the force of investigation and prosecution of illegal behaviour by real estate agencies and, based on Shanghai's example, multiple agencies will work together to discover and investigate without appeasement."

In addition to the arrests, local authorities have also shut down five public accounts on WeChat, the mobile messaging and social media platform, the Financial Times reported on Sunday.

China has imposed stricter controls over news and social media since President Xi Jinping came into power in 2013. Last year, a reporter was arrested last year for inciting "panic and disorder" in the stock market by reporting that a "national team" of state-owned financial institutions was planning to sell shares after spending trillions of yuan to shore up the stock market during the panic earlier in 2015. The reporter later made a public apology on state television.

Police reported that in 2015 they have blocked more than 15,000 people for various cybercrimes, including the spreading of rumors.

The line between censorship and enforcement of professional ethics is a blurry one in China. Real estate agents benefit directly from rumors related to housing transactions, and unscrupulous behavior by realtors is a common complaint among urban Chinese.

Housing analysts expect that Shanghai authorities will eventually impose new purchase restrictions to curb what is widely seen as a burgeoning property bubble. Similarly, the "national team" has apparently reduced its stock holdings gradually over the past year, according to stock exchange filings.