It is clear that not every bubble-bust episode leads to a financial crisis. However, if a demographic change, a property price bubble, and a steep increase in loans coincide, then a financial crisis seems more likely.
And China is now entering the “danger zone.” Although demographic factors are not the subject of the studies in this conference, there is a growing body of cross-national evidence that compositional change in population has a significant effect on property prices (especially the land component).3 This comes as no surprise since, in the population dividend phase, young baby boomers want to buy more land and save more real money for their retirement.