Are House Prices Rising Too Fast in China?

By Ashvin Ahuja, Lillian Cheung, Gaofeng Han, Nathan Porter, Wenlang Zhang

December 1, 2010

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Format: Chicago

Ashvin Ahuja, Lillian Cheung, Gaofeng Han, Nathan Porter, and Wenlang Zhang. Are House Prices Rising Too Fast in China?, (USA: International Monetary Fund, 2010) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Sharp increase in house prices combined with the extraordinary Chinese lending growth during 2009 has led to concerns of an emerging real estate bubble. We find that, for China as a whole, the current levels of house prices do not seem significantly higher than would be justified by underlying fundamentals. However, there are signs of overvaluation in some cities’ mass-market and luxury segments. Unlike advanced economies before 2007-8, prices have tended to correct frequently in China.Given persistently low real interest rates, lack of alternative investment and mortgage-to-GDP trend, rapid property price growth in China has, and will continue to have,a structural driver.

Subject: Asset prices, Housing prices, Land prices, Mortgages, Real interest rates

Keywords: Benchmark price, House price, Price misalignment, Property price, WP

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2010/274
Stock No:

WPIEA2010274
ISBN:

9781455210817
ISSN:

1018-5941

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