“China, Canada and Hong Kong are among the economies most at risk of a banking crisis, according to early-warning indicators compiled by the Bank for International Settlements.

Canada — whose economy grew last year at the fastest pace since 2011 — was flagged thanks to its households’ maxed-out credit cards and high debt levels in the wider economy. Household borrowing is also seen as a risk factor for China and Hong Kong, according to the study.”

“PAN JINGYUAN has little time for traditional family values. The 26-year-old says she has no intention of ever getting married and loves living far from her parents. But Ms Pan is traditional in one way—she sees a home as the best investment for her savings. She plans to buy a small flat in the southern city of Shenzhen, where she works at the headquarters of a restaurant chain. “There is no way the government would ever let prices really fall,” she says.

Such confidence has long been rewarded. Property prices in cities have roughly quadrupled this century, a rate of growth far exceeding that of the American housing bubble of the early 2000s, albeit from a lower base.”

“This has led to a series of concerns: that homes are increasingly unaffordable, that the economy is too reliant on property and that housing prices, having gone up and up, might someday crash.”

“The government has, until now, tried to reduce the risk by periodically applying brakes on the market. Whenever real estate overheats, the authorities restrict funding to developers and make it difficult for people to buy new homes—for example, by increasing mandatory down-payments. When prices stabilise, they relax the controls. But such measures create volatility. Every three years or so, prices surge again.”

“A big reason for the slow development of the rental market is that there is not much profit in it. Cities tend to give more benefits to homeowners, such as the right to send children to local schools, so families far prefer to buy homes.”

“One of the government’s new approaches is to offer incentives to developers to build decent rental properties. It is doing this by selling land for rental projects at steep discounts, in effect guaranteeing hefty yields for developers. In some big cities, plans call for these discounted plots to account for about a quarter of future land supply. The government has promised to give renters the same rights as homeowners, though some doubt that it will actually do this. Many urbanites would resent additional competition for school places.”

“The other way is more destructive. By imposing population limits on China’s largest cities, officials hope to combat what they call “big-city disease”: congestion, pollution and excessive pressure on urban resources (including, by implication, housing). Beijing aims to keep its population to 23m by 2020, while Shanghai wants no more than 25m people by 2035. Both are incremental increases over their current sizes and far below where, left unchecked, they would wind up. Population caps may help to calm the property market.”