The estimate of the real estate bubble in China that will soon burst will directly affect China’s banking system that would encourage to open a new crisis.
According to expert Kenneth Rogoff, the China's property began to collapse and potentially disrupt the banking system as the bubble that unpredictable. The banks have lent too much in real estate and might have to write off a good proportion of the loans.
The government has tried to cool the real estate market in China since 2007, especially for big cities like Shanghai and Beijing that its value has risen too much caused by speculation. But the boom did not stop even though the government had tried to raise mortgage rates and minimum down payment ratio for a home purchase, or even levying trial property tax. The real estate sales to be down, while prices continue to rise.
But estimates the real estate collapse in China are not recognized by several other experts. according to Stephen Roach, chairman of Morgan Stanley Asia Ltd., the last month that the property market has not overheated and the demand for this property is very, very solid. Meanwhile China’s minister of land and resources, Xu Shaoshi, expected prices to start falling within a few months without any major impact.
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