If property prices are going up 10% per year and price to rent is 30:1 (Vancouver) - to some it's not worth the risk of renting out the property.

You're just banking on leveraged appreciation.

Take a $2M condo. The rent is will be ~$60k for a year. The appreciation will be ~$200k, and the the principal (@ 3% interest - which they have if they're leaving it empty - is $35k).

You're getting an expected $235k if you leave it empty, and $280k (after vacancy and management) if you take on the risk of renting it.

Why go through all the hassle when the government is doing everything they can to pump up prices on leverage?

That depends on cashflow needs, and just how sure someone is that their spreadsheet (and expected future value) will turn out to be true. For property prices to go up 10% yoy credibly, property has to actually change hands after all, and that requires someone spending cash or financing every year to produce the data. If that stops, then everyone has to adjust their spreadsheets/models, and all the sudden that model gets very grim.

After all, actual cashflow is real/concrete and hence has a momentum and credibility that tends to reduce panic.

Once the money changes hands, it also is ‘permanently’ the owners. Expected market value? Not so much.

At some point, enough people blink that it collapses.

Or maybe not. At least that is what everyone in that situation tells themselves.

But it isn’t panning out for Chinese firms anymore like it used to.

This takes time to actually happen though, as everyone has very strong incentives to keep wil-e-coyote’ing once they’ve run off the edge of the cliff. And they did that many years ago.

And it does work, as long as there are enough ‘greater fools’ around, and there are a lot of greater fools.