Report: China needs to strike delicate balance to deflate property bubble

Report: China needs to strike delicate balance to deflate property bubble

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The two major risks facing China's real estate market are that the bubble could continue to inflate or eventually burst, a new report warned. China's property market still faces dual major risks as short-term administrative curbing policies to cool the housing market hold up and long-term adjustment methods are still yet to come, a top government think tank warned, Caixin reports.

The first risk is that property prices will surge following a prolonged government-mandated clampdown that subdued price growth, worsening the real estate bubble, according to the report by the National Academy of Economics Strategy (NAES) and the Global Urban Competitiveness Research Center for City and Competitiveness. Both institutions are affiliated with the Chinese Academy of Social Sciences, a top government think tank. The second is that the market will lose its long-held expectation that home prices will always go up, causing the bubble to burst and property prices to plummet.