Property bubble was not removed in China, says IMF

The International Monetary Fund warned China that it remains concerned over the property bubble in the country. The prices in many cities remain high even though Beijing has introduced higher inflation rate.

Chinese government undertook some measures to cool the real estate sector by having reduced transaction volumes and property price increases, but still in some larger cities prices still look “bubbly,” said Nigel Chalk, IMF mission chief to China.

"As long as the cost of financing is low and other investment options are sparse, the propensity for property bubbles will remain and the government will have to take progressively tighter administrative measures to stem demand and dampen house price inflation," the IMF review said.

Chalk said China could address the risk of recurring property price bubbles by raising the cost of capital, introducing property taxes and developing alternate household savings vehicles.