32 Pages Posted: 1 Feb 2011
Date Written: December 2010
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.
Suggested Citation: Suggested Citation
Ahuja, Ashvin and Cheung, Lillian and Han, Gaofeng and Porter, Nathan and Zhang, Wenlang, Are House Prices Rising Too Fast in China? (December 2010). IMF Working Papers, Vol. , pp. 1-31, 2010. Available at SSRN: https://ssrn.com/abstract=1751386
By Chao Lu
By Luo Yang