Will China's housing market hit the iceberg?

However, Sina.com reposted the report of People's Daily on Monday and is conducting an online survey. One question is whether the turning point in China's property market has come and 9,193 respondents at the time of publishing this story had voted yes, or 62.4 percent of all respondents, indicating that most online voters think the upward trend has come to an end.

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Tsinghua's Liu Hongyu told People's Daily that China is not likely to have an American-style sub-mortgage crisis as the development level of property finance in China is far behind that in the United States where financial institutions hold more than 50 percent equity in all existing houses.

Song Li, vice-director of the Economy Study Institute of the National Development and Reform Commission, said the urbanization rate in Japan was 60 to 70 percent when the country witnessed an all-around property prices decline but China's urbanization rate, under the strict definition, is only 40 percent, adding that he thinks China's property market has not entered the downward trend but is undergoing a periodical adjustment.

Tsinghua's Liu Hongyu said there is an actual need for housing due to rapid urbanization in China and there will no be cliff drops and China should avoid the scenario where prices increase too fast and sustaining them becomes difficult. However, according to a report released by the E-house R&D Institute on June 11, the housing price to income ratio in Beijing in 2013 was 14.5, indicating that Beijing residents needed to use 14.5 years of household income, without spending any, to buy an average apartment.

Even though there will not be clip drops or sub-mortgage crisis, it's not to say that there is no risk at all, Liu added.

Real estate development loans are the major source of risks as developers have turned to "shadow banking" to get fund for buying land, development and construction, including mezzanine finance, property trust, private equity and overseas bonds since China tightened its credit policy in the second half of last year.