Are House Prices Rising Too Fast in China?

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

No 2010/274, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; benchmark price; house price; property price; price misalignment (search for similar items in EconPapers)
Pages: 31
Date: 2010-12-01
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Citations: View citations in EconPapers (56)

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