The Chinese property market's crash potential has been described as 'Dubai times a thousand – or worse', but the limited data available makes forecasting exceptionally difficult.

Buy one, get one free
According to China Daily, sales volume shrank in 16 of the country’s 20 largest cities, and by more than 50% in eight of them. In Beijing, sales fell 23%; in Shanghai, they were an astonishing 80% below the 2010 level. In Nanjing, things were so bad that some developers tried to entice buyers with buy one, get one free deals – buy a house, and get an apartment free.

'Dubai times a thousand – or worse'
Yet prices in the major cities continued to rise: up 10% in 2009 and 21.5% in 2010, the year hedge-fund hero Jim Chanos (the man who called the Enron collapse) described the market’s crash potential as 'Dubai times a thousand – or worse'. So far, we've seen a mild scrape but no crash. So why’s it so hard to predict?

Chinese have been buying property for only 21 years
The Chinese market’s built on different foundations from our own. People have been buying property for only 21 years, and the government runs the banking system and owns the land. As a result, the residential property market is only 'free' to a limited extent. Beyond that, it functions as a government tool with which to massage the wider economy.

Bail-outs are coming thick and fast
Bail-outs are coming thick and fast in China. In less than a week the Chinese authorities have had to step in to prop up the banks, rescue the insolvent railway system and save the near bankrupt city of Wenzhou from a spectacular debt crash.

Credit almost 200pc of GDP
It is proving harder than expected for the central bank to manage a calibrated "soft-landing" after letting rip with credit to counter the Great Recession. The loan spree raised credit from 100pc to almost 200pc of GDP (on IMF estimates), including off-books trusts, letters of credit and sub-radar loans from Hong Kong.