Where does the money to buy real estate in China come from?

The Grey Market in Real Estate

Many builders barely broke stride. They turned to underground banks that are part of China’s thriving gray market.

Real estate brokers say buyers here, too, often sidestep official bank loans, financing their home purchases from hidden sources of income, whether graft, undeclared bonuses from government jobs or money earned legally but not reported to tax authorities.

If you've reined in the legitimate paths to completing transactions and the prices still go up, you not only have a bubble, you have fraud.

China's Battle on Property Prices is Not Over

Chinese policy makers have shown increasing concern that a property bubble risks both destabilizing the economy and creating social tensions among urban Chinese priced out of the market.

Oh, that concern is going to seem so quaint in 12-18 months.