How property bubbles may form because of purchasers & developers


For example, potential buyers who are actually not eligible should not be allowed to purchase real estate. If they do not have a down payment and need a huge cash back to purchase, they should not be encouraged to buy.

Maybe we will find some way to help them. Something like rent-to-own scheme where purchaser can afford to rent and then buy it in 5 years later? Otherwise, find them some affordable housing options.


If real estate developers did not manage to get enough buyers from the start, they should not get funding to continue their development.

If these “unwanted” developments continue, imagine what will happen when they are completed? It will cause market chaos on the supply side and even affect properties that have been sold out earlier.

Related news:

Measure that I agree that could help to control property bubbles:

News in China halts approvals for new residential real estate funds

The government-endorsed Asset Management Association of China, or AMAC, has verbally informed private equity firms it would no longer be accepting the required registrations to set up funds to invest in projects, people familiar with the decision said, requesting not to be named because the matter is private.

Applications that have already been made would also be denied, while existing funds wouldn’t be affected, the people said.

The suspension adds to the challenges for Chinese property developers after regulators tightened funding channels including bank loans and trust funding as part of a campaign over the past years to reduce risks.

As traditional avenues of funding were choked off, real estate companies turned to private equity funds backed by high net worth individuals and institutions to raise money, often using land or cash flow income from the project sales as guarantee.

See the comprehensive article here> China halts approvals for new residential real estate funds

How property bubbles may form in 2021 1

Can banks help to control property bubbles?

As the above mentioned, bank actually had done very great job over the years recently, where the approval of mortgage loan is much more requirements and credits score controlled.

Briefly, I do not foresee any numbers supporting this property bubbles potential.

However, if there are some potential bubbles forming, it is very important for the authorities to take immediate action to prevent any potential bubbles from forming.

When the government acts too late or believes that the market will correct itself, we may have another mortgage crisis like in 2008. Maybe this is why China took immediate action?

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Next article: 3 best time on property investment, scheduled live on 26 Aug 2021 8:00am