China’s residential property market rose for the 33rd straight month in November, prompting the government to continue its drumbeat of market-cooling measures to stave off the kind of risk that led to the 2008 subprime lending crisis in the United States. November’s average home price across 70 cities rose 4 per cent from a year ago, even if the growth pace was the slowest in six months, according to data by the National Bureau of Statistics. The average price rose 4.3 per cent in October from a year ago. Still, there were “growing signs of a buying spree in either new homes or pre-owned [property] in major cities like Shanghai,” said Song Yulin, a senior manager with the city’s property agency Baonuo. “Local authorities are set to step in to stabilise the market if a wild price gain in home prices occurs.” The stubborn refusal of home prices to yield to the government’s controls underscores why the Chinese bank regulator Guo Shuqing singled out real estate as the “grey rhino” of the nation’s banking industry , a metaphor that refers to a predictable catastrophic event, usually in financial services. The real estate sector has been one of the major driving forces of China’s economy as it creates tens of millions of jobs, generates trillions of yuan in taxes, stamp duties and land sale revenue for local authorities across the nation. At the same time however, housing affordability – especially the entry-level homes for first-home buyers and young couples on the first rung of the property ladder – is a hot-button issue for the ruling Communist Party, whose political contract with the population requires it to prevent home prices from soaring out of reach. Wary of using blunt instruments like the central bank’s key interest rate, local authorities are resorting to administrative measures to keep a lid on home prices. Shanghai residents, who are allowed no more than two homes for each household, must put down at least 70 per cent of the value of their second property as down payment, double the minimum payment for first-home buyers. The government has another big concern at the back of its mind: the need to prevent a burst in the real estate bubble from saddling the nation’s financial services industry with bad loans, which may spiral out of control to become a full-blown financial crisis, especially since 2020 is supposed to be another record year for defaults on corporate debt. Mortgage loans in the property marker accounted for 39 per cent of total bank loans in China, Guo was quoted as saying by the Shanghai Securities News. “It’s safe to say that the property market is currently the greatest grey rhino in terms of financial risks,” the state-run newspaper quoted him as saying. November’s average home price edged up by 0.1 per cent compared with the previous month, the slowest month-on-month gain since March, compared with October’s 0.2 per cent increase, according to the latest data. With home prices still running high, some marginal tightening in property policies can be expected, as the overall policy stance continues to normalise as China’s government brings the coronavirus pandemic under control, Goldman Sachs said in a research note. According to a study jointly conducted by the United Nations and the Chinese Academy of Social Sciences (CASS), elevated home prices in big cities would threaten their competitiveness because it would be difficult for them to lure global talent.