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This is what China’s real estate and stock markets are afraid of.

On June 16 Henderson Land Development (Listed in Hong Kong as 0012.HK) announced that the sale of 20 luxury apartments had collapsed as buyers pulled out. The company said it had cancelled $342 million in deals in the 39 Conduit Road development.

Prices in the development had drawn a government investigation as they headed toward setting a world record price of $11,300 per square foot for the most expensive unit, a $55 million apartment on the 45th floor of the tower.

Housing prices in Hong Kong have climbed 5.7% in 2010 after rising 29% in 2009. That has led to government fears that the market is in a bubble and to government actions to slow the market.

Hong Kong has raised minimum down payments on luxury apartments to 40% from 30%, increased the stamp tax on luxury units, and required developers to disclose when they have sold properties to their own executives. That last measure is part of an attempt to rein in marketing practices that developers use to create an artificial scarcity n order to drive up prices.

So far while the measures haven’t kept housing prices from rising, they have hurt the stock prices of development companies. Shares of Henderson Land, for example, were down 18% in 2010 as of June 14. (The Hong Kong Stock Exchange was closed on June 15 and on June 16 for the annual Dragon Boat Festival.)