Naysayers have long bemoaned that a crash will soon pop China’s housing bubble. This prediction has been in the pipe for awhile, but a number of signs make it seem as though a crash is imminent, just a year after China’s stock market crashed.

Having already broken records last March, property prices in Shenzhen have gone insane over the past 12 months, growing by an astonishing 52 percent, its fastest pace since 2011.

With an average price hovering around 60,000 to 100,000 yuan per square meter, new homes in Shenzhen cost much more than new flats in Hong Kong’s New Territories despite the medium income in Shenzhen (4,500 yuan per month) being only a third to that in Hong Kong.

To complicate things further, Shenzhen’s high property prices are complemented by a glut of new homes under construction, awaiting future buyers. 8.08 billion square meters of new homes are either under construction or currently available for sale, up 12 percent from 2014. At current rates of purchases, it would take 6.3 years to sell them all.

Meanwhile, other first-tier cities are experiencing massive property price hikes of their own. Shanghai has seen its property prices jump by 17 percent, while Beijing and Guangzhou have both seen increases of 10 percent.

Support for the economy vs bubble risk

What’s behind this phenomenal rise in property prices? The central government is supporting the economy through monetary stimulus and by rolling back property curbs, which it did in February. But this also risks further fueling the property bubble.

“Property prices continued to soar in cities like Shenzhen and Shanghai for the past month, driven by the sharp surge of credit expansion, which appears to be endorsed by the central bank and local governments as a way to reinvigorate sales and digest inventory in third- and fourth-tier cities,” wrote analysts in a report from HSBC Holdings, reported Bloomberg.

In more direct terms, UOB Kay Hian Ltd. analysts wrote in a March 2 note, “The bubble has been growing big.”

But even as markets in first-tier cities start to become overheated, smaller cities show that they are willing to manipulate conditions to heat up their own market. For example, Shenyang casually floated the idea of a zero down-payment mortgage policy to boost its new housing market that slipped 0.5 percent in January before meeting strong resistance from the People’s Daily.

Noting that Chinese authorities have done this before, Eric Lui of the Hong Kong Economic Journal noted the correlation between housing sector contributions and overall economic growth has weakened due to unreliable GDP estimates and a national restructuring of its main industries, like construction.

Lui warned:

The property market cycle in Hong Kong over the last 20 years shows that if home prices spike over 50 percent within 12 months, as we’ve seen in 1997, the stage is set for a bursting of the bubble.

This is something that Shenzhen property buyers should bear in mind.

Panic buying

And yet, despite warning signs pointing to disaster, Shenzhen buyers continue to buy despite prices that continue to grow with no signs of stopping. What makes someone act in this way?

According to David Scutt of the Business Insider, there’s an acronym for this: FOMO, or the Fear of Missing Out. Scutt writes that the same inspiration that led Chinese investors to bandwagon on the Chinese stock market before it crashed last summer looks to be the same thing driving new homeowners to buy new homes despite their exorbitant prices.

The same way Chinese investors saw stocks with ever-increasing prices as a “no-brainer”, now they view homes the safe way.

Bloomberg interviewed 35 year-old civil engineer Liu Yihui who said he decided to buy a new home since it is his best option for the time being.

“People are a bit crazy in this market, but what can you do?People are a bit crazy in this market, but what can you do?” said Liu. “Stock returns were terrible, so I made up my mind to put my money in real estate.”

FOMO is also what made 61 year-old retiree Yao Peirong buy a two-bedroom apartment on the outskirts of Shanghai for 6.6 million yuan on February 19, after first borrowing 300,000 yuan within an hour after his first viewing to secure the purchase.

“I couldn’t sleep,” Yao told Bloomberg. “Home prices in this neighborhood have jumped almost 11 percent since two weeks ago.”

And with all these warning signs that a housing market crash is imminent in China, it’s amazing what some people will do for a good night’s rest.