{
  "title": "IMF Survey : Experts Confer on State of China’s Housing Market",
  "publication": "IMF News, January 29, 2016",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/sores012916a",
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  "summary": "House prices in China have been on a long upward march over the past decade, prompting questions about what the future holds. At a <a href="http://www.imf.org/external/np/seminars/eng/2015/HousingChina/index.",
  "publishDate": "2016-01-29",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Conference: International Symposium on Housing and Financial Stability in China, organized by the IMF in cooperation with the Chinese University of Hong Kong, Shenzhen and Princeton University; held in Shenzhen.\n- Publication date: January 29, 2016.\n- Purpose: Spotlighted new data sets on China’s housing markets as part of the Global Housing Watch initiative and IMF enhanced surveillance of global housing markets."
    },
    {
      "heading": "Demand–Supply Imbalances",
      "content": "- National trend masks large city-level variation in house price movements.\n- Residential land price index for 35 large cities (based on government sales of land to private developers) findings:\n  - Prices increased in inflation-adjusted terms by about 80 percent a year in Beijing over the past decade.\n  - Prices increased by only 10 percent a year in Xian over the past decade.\n- Gyourko’s estimates of balance between housing supply and demand in the 35 cities:\n  - In 20 percent of the cities (including Beijing, Hangzhou, Shanghai, Shenzhen) supply remains “below our projected demand.”\n  - In 40 percent of the cities (including Xian) supply is “at least 30 percent above projected demand.”\n  - The remaining 40 percent of cities are “modestly over-supplied.”"
    },
    {
      "heading": "Housing Demand and Incomes; Financial Soundness of Homeowners",
      "content": "- Data source: comprehensive mortgage-loan data set from 2003 to 2013 from a major bank.\n- Positive indicators:\n  - Household disposable income has grown annually by 9 percent for a decade.\n  - Homeowners put a down payment of over 30 percent on mortgage loans.\n- Affordability and risk metrics:\n  - House price-to-income ratio is around eight in smaller cities.\n  - House price-to-income ratio is greater than ten in the largest cities.\n  - High ratios imply that small adverse changes in income growth profiles for low-income households could impair mortgage repayment ability.\n- Comparative risk note:\n  - U.S. experience: “expectations that house prices could never fall” was a fatal flaw.\n  - China-specific risk: “markets having irrational expectations of short-run income growth.”"
    },
    {
      "heading": "Links between Housing Market and Local Government Debt",
      "content": "- Institutional constraint: local Chinese governments are prevented from directly issuing debt to fund mandated capital projects.\n- Funding mechanism: local governments sell public land to raise funding; future land sales revenue is committed to repay local government debt.\n- Collateral practice: land parcels are the most widely-used collateral for local government debt.\n- Risk implication: “a substantial drop in housing or land prices may increase the risk level of local government debt.”"
    },
    {
      "heading": "Policy Implications and Long-Run Perspectives",
      "content": "- Short-term risks exist, but should be weighed against China’s long-run rebalancing goals.\n- Post-global financial crisis growth: “relied heavily on credit and investment, particularly real estate investment.”\n- Rebalancing aim: shift toward growth that is more sustainable.\n- Urban development strategy question:\n  - Whether China should follow a European/Japanese model of a few large-population cities or develop more megacities dispersed across the country.\n  - Preference expressed for developing more megacities to relieve pressure on housing and other amenities in big cities."
    },
    {
      "heading": "Conference Context and Global Monitoring",
      "content": "- The Shenzhen conference was the fourth in a Global Housing Watch conference series:\n  - First two conferences focused on housing markets in advanced economies (Dallas and Frankfurt).\n  - Third conference, in Bangalore, expanded coverage to emerging markets.\n- Messaging: enhanced surveillance of housing markets reflects the view that the “era of benign neglect of house price booms is over.”\n\nSource: IMF Survey : Experts Confer on State of China’s Housing Market, January 29, 2016.\n\n---\n\n Content in this bundle\n\n- Session202hfangpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- Session202jgyourkopdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- Session203ydengpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- Session2hhuangpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- Session3rkosspdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- 0116pdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- IMF Research\n- Conference on housing and financial stability\n- Min Zhu Speech on housing markets\n- Blog: Era of Benign Neglect of House Price Booms is Over\n- Global housing watch throws spotlight on booms and busts\n- conference\n- Global Housing Watch\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/sores012916a"
    }
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    "Published: January 29, 2016",
    "Conference: International Symposium on Housing and Financial Stability in China, organized by the IMF in cooperation with the Chinese University of Hong Kong, Shenzhen and Princeton University; held in Shenzhen.",
    "Publication date: January 29, 2016.",
    "Purpose: Spotlighted new data sets on China’s housing markets as part of the Global Housing Watch initiative and IMF enhanced surveillance of global housing markets.",
    "National trend masks large city-level variation in house price movements.",
    "Residential land price index for 35 large cities (based on government sales of land to private developers) findings:",
    "Gyourko’s estimates of balance between housing supply and demand in the 35 cities:",
    "Data source: comprehensive mortgage-loan data set from 2003 to 2013 from a major bank.",
    "Positive indicators:",
    "Affordability and risk metrics:",
    "Comparative risk note:",
    "Institutional constraint: local Chinese governments are prevented from directly issuing debt to fund mandated capital projects.",
    "Funding mechanism: local governments sell public land to raise funding; future land sales revenue is committed to repay local government debt.",
    "Collateral practice: land parcels are the most widely-used collateral for local government debt.",
    "Risk implication: “a substantial drop in housing or land prices may increase the risk level of local government debt.”",
    "Short-term risks exist, but should be weighed against China’s long-run rebalancing goals.",
    "Post-global financial crisis growth: “relied heavily on credit and investment, particularly real estate investment.”",
    "Rebalancing aim: shift toward growth that is more sustainable.",
    "Urban development strategy question:",
    "The Shenzhen conference was the fourth in a Global Housing Watch conference series:",
    "Messaging: enhanced surveillance of housing markets reflects the view that the “era of benign neglect of house price booms is over.”",
    "[Session202hfangpdf (PDF)](/-/media/websites/imf/imported/external/np/seminars/eng/2015/housingchina/pdf/_session202hfangpdf.pdf){rel=\"external\" type=\"application/pdf\"}",
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    "[Session2hhuangpdf (PDF)](/-/media/websites/imf/imported/external/np/seminars/eng/2015/housingchina/pdf/_session2hhuangpdf.pdf){rel=\"external\" type=\"application/pdf\"}",
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    "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[IMF Research](https://www.imf.org/en/news/search)",
    "[Conference on housing and financial stability](http://www.imf.org/external/np/seminars/eng/2015/housingchina/)",
    "[Min Zhu Speech on housing markets](http://www.imf.org/external/np/speeches/2014/060514.htm)",
    "[Blog: Era of Benign Neglect of House Price Booms is Over](http://blog-imfdirect.imf.org/2014/06/11/era-of-benign-neglect-of-house-price-booms-is-over/)",
    "[Global housing watch throws spotlight on booms and busts](http://www.imf.org/external/pubs/ft/survey/so/2014/NEW061114A.htm)",
    "[conference](http://www.imf.org/external/np/seminars/eng/2015/HousingChina/index.htm)",
    "[Global Housing Watch](http://www.imf.org/external/research/housing/index.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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