Assessing China’s Residential Real Estate Market

By Ding Ding, Xiaoyu Huang, Tao Jin, Waikei R Lam

November 16, 2017

Preview Citation

Format: Chicago

Ding Ding, Xiaoyu Huang, Tao Jin, and Waikei R Lam. Assessing China’s Residential Real Estate Market, (USA: International Monetary Fund, 2017) accessed September 18, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

China’s real estate market rebounded sharply after a temporary slowdown in 2014-2015. This paper uses city-level data to estimate the range of house price overvaluation across city-tiers and assesses the main risks of a sharp housing market slowdown. If house prices rise further beyond “fundamental” levels and the bubble expands to smaller cities, it would increase the likelihood and costs of a sharp correction, which would weaken growth, undermine financial stability, reduce local government spending room, and spur capital outflows. Empirical analysis suggests that the increasing intensity of macroprudential policies tailored to local conditions is appropriate. The government should expand its toolkit to include additional macroprudential measures and push forward reforms to address the fundamental imbalances in the residential housing market.

Subject: Bank credit, Financial institutions, Housing, Housing prices, Money, Mortgages, National accounts, Prices, Real estate prices

Keywords: Asia and Pacific, Asset price risk, Bank credit, China real estate market, Down payment, Down payment ratio, Housing, Housing bubbles, Housing market, Housing prices, Inventory ratio, Land sale, Land sales volume, Macroprudential policy, Mortgage lending, Mortgages, Price correction, Price decline, Price rise, Real estate, Real estate prices, Redidential house price, WP

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2017/248
Stock No:

WPIEA2017248
ISBN:

9781484324813
ISSN:

1018-5941

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