Recruiting in China

Will the bubble in China's real estate burst in the near future, just like the titanic hitting the iceberg?

The answer may be no, some experts said.

After a round of soaring prices, the housing market is showing increasing signs of cooling down.

May was the fifth consecutive month in which the rate of price growth slowed.

Worries raised high that the decline may continue as banks become reluctant on mortgage lending.

According to official data, sales of residential property slumped 7.7 percent during the first quarter of 2014 to 1.1 trillion yuan (about 176.6 billion U.S. dollars). Month to month, home prices have been falling in more of the 70-strong pool of major cities surveyed by the National Bureau of Statistics.

When asked whether China's housing market is experiencing a "turning point" as sales have plunged in recent months, Feng Jun, chief economic manager with the Ministry of Housing and Urban-rural Development, said recently changes in the housing market are normal and should be viewed in a broader context.

He reiterated that the aim of property control policies is to create a balanced and steady market.

"The policy is to protect reasonable buying demand and to restrain investment," he said.

The fact is that the underlying demand-supply equation has changed, with ongoing construction exceeding the demand of a growing urban population and upgrading.

Meanwhile, investment demand is being eroded by stagnant property prices, the anti-corruption drive and investment alternatives such as wealth management products and overseas assets, according to investment bank UBS AG.

"We do not expect a sudden collapse of property prices or a financial or balance-of-payments crisis, as is often seen in emerging economies," said Wang Tao, China economist with UBS.

A big drop in construction activity—even without a large price correction—would likely have a serious negative impact on the industrial complex and, through that, economic growth and banks' balance sheets.

Hence, at present the real estate market is facing a serious adjustment, and the era of the secular property boom is forever behind us, he added.