In general, it's debt that's the warning sign. As developers and households become more leveraged, the risk is that a price downturn doesn't remain contained within the property market.

"The high leverage will amplify the damage to the economy if a property bust happens," said Bloomberg Intelligence economist Fielding Chen. "The shock wave will be passed onto the entire financial system, and losses will be greater," he said.

Once home prices tumble, about 40 percent of Chinese banks will be hit hard, according to a recent research note from Ping An Securities.

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