China's real estate sector is booming. However, to avoid the risk of bubble burst, Chinese banking regulators are seeking to watch the sector more closely.

The main focus is currently on managing risks from off-balance-sheet credit channels. China seeks to control the credit flow to the real estate sector to manage the risk of overheating of the market.

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The China Banking Regulatory Commission said in a statement that it aims to boost the supervision of real estate trusts for managing the flow of credit to the sector.

The commission also seeks to oversee various wealth management products offered by the banks. It also asked for the comprehensive strengthening of risk control measures to avert the chances of systematic financial risk.

It is believed that China's property market is due for a possible correction, after booming for an extended period of time.

Real estate sector accounts for 15 percent of the country's gross domestic product. Recently, major property markets such as Beijing, Nanjing and Shanghai saw their governments enacting new laws restricting home purchases. These markets have seen property prices zooming at alarmingly high speed.

According to a report released by the National Bureau of Statistics on Friday, the property prices in China grew at the fastest speed in September. By the end of the month, the country recorded $2.65 trillion worth of outstanding mortgage loans to individuals.

The China Banking Regulatory Commission has asked banks to be extra vigilant about the credit extended to industries with capacity glut. It was noted that banks are required to manage their credit risk cautiously and offer control and support measures. 

Tagschina, China Banking Regulatory Commission, National Bureau of Statistics