Properties bubble is to start threatening the Chinese economy

The Chinese economy has witnessed a property price boom which caused rapid inflation acceleration which is threatening the nation's growth, where demand on real estate and residential homes jumped the most since five years on an annual basis. 

The new home prices have increased in about 67 of 70 Chinese cities during the month of May which led to rising income in the current period alongside loans expansion which drove Chinese people to increase demand on houses even in investing, where individuals currently own many properties as they prefer investing in the real estate sector as long as they notice inclining prices. 

Inflation rates are still above the Chinese government target for the fourth straight month during April, after the consumer price index accelerated near the fastest pace in more than two years, threatening the economic growth as monetary policy makers will move to increase the interest rate once again in the upcoming period. 

On the other hand, China's gross domestic product expanded faster than expected during the first quarter of this year, where this fast pace of economical expansion is a result of improved exports, as the demand for Chinese products increased during the period due to the Asian economies recovery, which supported declining unemployment rate in China as the employers need more hiring to meet global demand, thereby helping  increase wage growth which means more pressure on inflation. 

The Chinese government is discussing the current market environment as they see that the current housing prices might need the central bank's intervention by putting a suitable monetary policy that aims to curb loans in order to decrease total spending, and also hike its interest rate slightly in order to face inflation risks.