"It's not going to be a huge crash because the demand for housing in China is still incredible," said Mobius. "But the prices are too high. When the prices come down I think you will see some stability."
China's Premier Wen Jiabao said last month the government will "firmly" maintain its control over the property market even as it seeks to "fine tune" other economic policies.
Bullish on Commodities
Mobius said the long-term upward trend for commodities, including copper, palladium, nickel and platinum, remains intact.
"The trend is definitely up because there's worldwide demand for whatever it is," he said. "It's there because of China, India, Brazil. All these big countries that are producing more and more consumer goods are going to need more and more."
Chinese President Hu Jintao pledged to boost imports as the world's second-biggest economy heads for what International Monetary Fund Deputy Managing Director Zhu Min said this month would be a successful downshift from inflationary growth.