Can governments prevent property bubbles?

As Ireland watches the value of residential property plummet by 50%, according to Tom Parlon at CIF, it is interesting to see other economies tackle spiralling property values. It will be interesting to see if China, a country where government will means everything, can head off a property bubble and crash. Yesterday Premier Wen Jiabao warned against ‘latent risk’ in Chinese banks and of a property bubble. It is interesting that two specific policies have been proposed, the introduction of a property tax and a program to build low-cost (note no use of the oxymoronic term “affordable”) housing. China is seriously considering these initiatives after property rose by 10% in one year so it would appear it is some way away from the madness that beset this country. We wait to see how they get on…

And let us not forget that China is not the only country confronting a developing property bubble – ah the good old days!