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Assessing China’s Residential Real Estate Market
Author:
Ding Ding
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,
Xiaoyu Huangnull

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Tao Jinnull

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Mr. Waikei R Lam
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Series:
IMF Working Papers
Volume/Issue:
Volume 2017: Issue 248
Language:
English
Publication Date:
16 Nov 2017
DOI:
https://doi.org/10.5089/9781484324813.001
ISBN:
9781484324813
ISSN:
1018-5941
Pages:
26
Keywords:
WP; down payment; housing market; China real estate market; housing bubbles; macroprudential policy; real estate; price correction; inventory ratio; asset price risk; land sales volume; price rise; mortgage lending; Redidential house price; down payment ratio; land sale; price decline; Housing prices; Real estate prices; Mortgages; Housing; Bank credit; Asia and Pacific
Legal-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.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2017: Issue 248