Assessing China’s Residential Real Estate Market

Ding Ding, Xiaoyu Huang, Tao Jin () and Waikei Lam

No 2017/248, IMF Working Papers from International Monetary Fund

Abstract: 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.

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 (search for similar items in EconPapers)
Pages: 26
Date: 2017-11-16
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Citations: View citations in EconPapers (6)

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