The subsiding of the factors supporting the real estate "bubble" means it has reached an advanced stage, a stage where it is highly likely to burst because a short-term adjustment with a sharp drop is not at hand.

First, there will not be any change in ample liquidity in the short term. With tightening real estate financing boundaries, declining trade surplus and mounting pressure of inflation, liquidity cannot lead to immediate shortage as in 2008. Therefore, housing demand is not expected to contract sharply.

Second, the banking system is unlikely to collapse or to limit credit issuance strictly in the short to medium term. So the housing market will not follow the trend seen in the US.

Third, supply in the real estate sector is less stressful, and the adjustments of 2008 have made housing developers more prudent. Regardless of the base quota factor, the growth rates of real estate investment and new constructions are lower than the average. And corporate debt ratio and cash flow are stronger than in 2008. So as long as demand does not plummet, developers should be able to adjust supply by controlling the pace of development.

I think this is the toughest regulation policy on the real estate market. Adjustments are expected in the tax policy, too. The housing market "bubble", especially in the country's first- and second-tier cities, has reached an advanced stage. So, it will create an impact on real estate sales and prices in the next one or two quarters. And, finally the government's new policy to rein in the housing market could be the last straw that breaks the camel's back.

I tend to believe that in the next two or three years, the property market will experience a relatively slow adjustment, the growth of housing trading volume will be lower than the average level - say, 25 percent (while a certain growth rate could still be guaranteed) - and housing prices will see correction or slow but continuous decline. The situation will be somewhat like Japan's slow adjustment process after the 1990s.