The recovering property market in China is at risk from excessive bank lending flowing into the sector, experts are warning, and in South Korea the government is considering measures to cool the real estate market.
Many independent economists are issuing warnings about China's surging money growth and now Wu Xiaoling, former vice governor of the People's Bank of China says there is a danger that assets will bubble.
'Under conditions of overcapacity, excess money supply will not lead to rises in price indexes, but it could generate asset bubbles,' she said.
'The money has really gone out and if it is a time when there is no investment in the real economy and no one will put the money in banks to earn interest, then the funds will flow into the property and stock markets,' she added.
In the first six months of the year, Chinese banks granted a record 7.37 trillion yuan ($1.08 trillion) in new loans, almost 25% of annual GDP and eclipsing a full-year minimum target of 5 trillion yuan.
Property prices have been rising beyond expectations in recent months. Indeed the World Bank said it will not be necessary for the Chinese economy to need further stimulus and it described the prospects for the property market as quite good.
Meanwhile South Korea is also on the edge of experiencing a property price bubble. The government is considering introducing measures to cool the market as speculators start to drive up real estate prices.
The central bank is monitoring a big increase in mortgage lending and a pickup in real-estate prices. Record low interest rates are also stoking the nation's economic recovery and could inflate property price bubbles.
'The government is afraid excessive idle money is flowing into the property market, driven by record-low rates,' said Park Jae Ryong, a research fellow at Samsung Economic Research Institute in Seoul.