China's Real Estate Bubble

ChinaLawBlog references a few datapoints on China's real estate market (Chovanec). I'd be curious how rising real estate prices compare to the rising incomes.

Chovanec argues that it's difficult to reconcile rising real estate prices and falling rental prices but not necessarily. If enough people decide that buying a house is better than renting, this will reduce the demand for rentals (the inverse has been happening recently in a lot of US cities where real estate prices have fallen while rental prices rise).

It would be more interesting (and convincing) to compare income levels to real estate prices compared with other developing countries around the world and the cap rate (Wikipedia, equivalent to the price/earnings ratio) of commercial real estate. It's useful to remember that real estate has intrinsic value based on the underlying productivity who live and work there (neoHouston).

Personally, I suspect when you look at both a bubble exists but I'm not entirely convinced that it's as overvalued as some people suspect given that incomes in larger cities rise faster than elsewhere and particularly in China (just based on some basic numbers in Guangzhou).