China's realty won't go US way

Housing prices in China have risen by 53 percent over the last four years, raising concerns that a bubble has been created in the real estate sector. There is little doubt that there has been a growing speculative component in property markets in many Chinese cities and/or segments, which in turn has pushed up housing prices beyond their fundamentally justified levels.

This leads us to three important questions: First, will the bubble burst? Second, if so, when? Third, how serious may be the implications for the economy?

We dare not answer the second question. But we will venture to give some thoughts on the first and third.