Are House Prices Rising Too Fast in China?

32 Pages Posted: 1 Feb 2011  

Ashvin Ahuja

International Monetary Fund (IMF)

Lillian Cheung

Hong Kong Monetary Authority

Gaofeng Han

Hong Kong Monetary Authority; University of California, Santa Cruz - Department of Economics

Nathan Porter

International Monetary Fund (IMF)

Wenlang Zhang

Independent

Date Written: December 2010

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.

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

Ashvin Ahuja

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Lillian Cheung

Hong Kong Monetary Authority ( email )

3 Garden Road, 30th Floor
Hong Kong
Hong Kong

Gaofeng Han

Hong Kong Monetary Authority ( email )

3 Garden Road, 30th Floor
Hong Kong
Hong Kong

University of California, Santa Cruz - Department of Economics ( email )

Santa Cruz, CA 95064
United States

Nathaniel John Porter (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Wenlang Zhang

Independent ( email )

No Address Available

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