An ongoing series.

Today's SCMP:

The bubble in Shanghai's property market is destined to pop; the question is how soon and what the ripple effects will be...if nothing else, it will be a destabilising blow to investor and consumer confidence across the country if Shanghai home prices start a downturn before the 2008 Beijing Olympics or the 2010 World Expo...

Farmers can now sell their land-use rights and move to the city. Thinking they have escaped the persecution of corrupt local officials, they could soon find their savings wiped out in a property crash - something they were led to believe the government would never allow.

Yet it is also a paradox of life on the mainland that when the stakes are high, there is less reason to fear a disastrous outcome. The greater the threat to the state, the more effective the response will be. Masses of homeowners may get upset; but they will not be allowed to become a dispossessed, homeless, rebellious class. First, the law is on their side: bankruptcy laws are still too vague for banks to foreclose on properties. Second, the banks themselves can always just be bailed out again.

This might explain why genuine financial-sector reform is still so slow in coming.

Update: Hong Kong version.

From the SCMP:

It was a speculator's dream: flipping a flat for a cool million in profits in 48 hours - without even making a full down payment. Only a day after Sun Hung Kai Properties announced that all of the 800 units available in The Arch had been sold, a 1,093 sq ft flat in the West Kowloon development was sold on the secondary market for $9.08 million - or $8,307 per sq ft.

The unidentified seller had signed a purchase agreement for the unit on Saturday for $7.85 million, after putting down a deposit of about 15 per cent, according to Centaline Property Agency, which brokered the transaction.