We have for a long time writen about the property bubble in China. The Chinese real estate system is driven by decrees from Beijing which then tumble down to the local level. Prices are often tossed aside for political reasons. China wants “growth,” or did, at all cost, even if it required a huge misallocation of resources. Because the market has not been allowed to work in China, especially in the real estate sector, it makes sense to expect prices to eventually burst the dam.
This is a great example of why the government should never manage the economy. The more government manages, the more it will mess things up. Over time this is nearly always true. It is absolutely true in China.