Understanding Residential Real Estate in China
IMF Working Papers, April 28, 2015
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Bibliographic details
- Authors: Mali Chivakul, Waikei R Lam, Xiaoguang Liu, Wojciech Maliszewski, Alfred Schipke
- Published: April 28, 2015
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484337066.001
Overview
- China’s residential real estate sector plays an important role in the economy and has been a key driver of growth.
- Since 2014 the sector has softened visibly, reflecting overbuilding across many cities.
- The paper asks how severe the adjustment will be and how long it will last, and emphasizes that an orderly adjustment is welcome.
Data, methods, and scope
- Uses various datasets and an analytical framework to estimate demand and supply conditions.
- Develops a number of scenarios to determine the oversupply both at the national level and by city tiers.
- Full text is also available in Chinese.
- Authors: Mali Chivakul, Waikei Raphael Lam, Xiaoguang Liu, Wojciech Maliszewski, Alfred Schipke.
- Date: April 28, 2015.
Key findings
- The adjustment in the residential real estate sector will be a multiyear process with adverse implications for investment and growth.
- Smaller cities, as well as those in the Northeast region, face more challenging demand-supply dynamics.
- Allowing the adjustment to take place while avoiding a too sharp of an economic slowdown is identified as the key policy challenge.
Scenarios and analytical outputs
- The paper develops multiple scenarios to quantify oversupply:
- Oversupply is assessed at the national level.
- Oversupply is assessed by city tiers.
- The scenarios are used to evaluate demand and supply imbalances and their implications for investment and growth.
Policy implications and recommendations
- Permit an orderly, multiyear adjustment in the residential real estate sector.
- Manage the adjustment to avoid a sharp economic slowdown that would amplify adverse implications for investment and growth.
- Pay particular attention to smaller cities and cities in the Northeast region given their more challenging demand-supply dynamics.
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