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Chinese Researcher: Three Incidents That Could Cause the Real Estate Bubble to Burst

Beijing Youth published an article by Ni Jinjie, a visiting researcher at the People’s Insurance Company of China, studying when China’s real estate bubble would burst. Ni identified what might cause the bubble to burst, for example, local governments hiking up land prices, speculators pumping hot money into the real estate market, and strong demand. Ni put forward three conditions for China’s real estate market to burst:

1. When the central government initiates the financial system reform and begins to restrict local government’s land income;
2. When the government’s monetary policy moves into a retraction cycle.
3. When there is no buyer for Real Estate properties.

The first two conditions are a function of the government. Ni noted that despite the central government’s determination to control real estate prices, the current land policy and monetary supply policy are still stimulating the bubble.

Source: Beijing Youth, December 30, 2009