I agree that the price growth rate of Chinese real estate is unsustainable. However, another side of the equation is the value of fiat currency. In China, the Yuan is pegged to the US dollar in a floating peg exchange rate mechanism. As long as China depends on USA and the dollar as a reserve currency the government will continue creating new RMB to buy the dollars and maintain a favorable exchange rate advantage for exports. The Chinese gov is currently working on import substitution to increase domestic demand and reduce its dependency on exports to "developed" countries.
I suspect that the real estate will not implode in a USA style 2008 crash but rather lose value in terms of purchasing power as real estate fails to compensate for the erosion of RMB and USD value due to inflation. For the Chinese, there are few choices with so much cash. Gold and silver are much more illiquid than real estate and can't be rented out. I do expect to see some downturn in the big cities where prices have risen dramatically but keep in mind that Chinese have a large equity position in real estate. It is not like the zero down loans in the US. People have been calling for a real estate crash in China for almost 10 years now and it continues to rise. I believe it is more or less a vote against the fiat currency system and eventually other sectors will catch up rather than real estate crashing like it did in USA.
Thanks for your post. It is a great topic.