This staggering statistic is both a vindication of China’s massive growth over the last 20 years and a cautionary tale of  a potential housing bubble that could burst.

Based on calculations by the International Monetary Fund 7 out of 10 of the world’s least affordable markets—Beijing, Shanghai, Shenzhen, Hong Kong, Tianjin, Guangzhou and Chongqing—are now in China.

The IMF’s price-to-wage ratio, which measures median housing prices in a given city against median disposable incomes, reflects affordability rather than absolute property value. This means the mid-range price of an apartment in New York is 6.2 times more than what a typical family makes in a year. By comparison, it would take nearly a quarter-century of earnings to buy a similar apartment in Beijing.

China Vanke [one of the largest developers in China] chairman Wang Shi said the mainland’s property market faces the risk of a “bubble”, reiterating concerns the developer raised three months ago.

Home prices have been increasing even as the government in March stepped up a three-year campaign to cool the market. The measures included raising down-payment and mortgage requirements, imposing a property tax for the first time in Shanghai and Chongqing, and enacting purchase restrictions in about 40 cities. New home prices jumped 6.9 per cent in May, the most since they reversed declines in December, showing that the property market remains complex.

For Western investors the advice is to wait and see. China is full of growth but there are times when the economy sends mixed messages and currently the housing market in the Middle Kingdom is hard to read.

With Graphics from Sober Look