Why China's Property Market Is Getting Scary

Photo Credit: Getty Images Worries that China’s home market is over heating are spreading beyond mainland policymakers — who recently unveiled a slew of cooling measures — with key industry players including the head of the country’s largest real estate developer warning of huge risks in the sector.

Wang Shi, CEO of Vanke said on the CBS News’ “60 Minutes” show over the weekend that China’s property sector was already in a bubble state.

China has seen a boom in the property sector recently, with some cities seeing a 10-fold increase in prices, that have driven the average home buyer out of the market. According to estimates, the cost of a home in Shanghai would be around 45 times the average resident’s annual salary.

Shi added that if the property bubble were to burst, it would be a “disaster,” with a plunge in home prices sparking an “Arab Spring” type social unrest.

Real estate is among the most popular investment vehicles in the country, given volatility in the domestic equity markets, so a steep decline in prices would impact millions of local investors.

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