Understanding Residential Real Estate in China

26 Pages Posted: 26 May 2015

See all articles by Mali Chivakul

Mali Chivakul

International Monetary Fund (IMF)

W. Raphael Lam

International Monetary Fund (IMF)

Xiaoguang Liu

International Monetary Fund (IMF)

Wojciech S. Maliszewski

London School of Economics & Political Science (LSE) - Department of Economics

Alfred Schipke

International Monetary Fund (IMF)

Date Written: April 2015

Abstract

China’s residential real estate sector plays an important role in the economy and has been a key driver of growth. Since 2014 the sector has softened visibly, reflecting overbuilding across many cities. An orderly adjustment of the sector is welcome. The key questions are how severe the adjustment will be and how long it will last. This paper uses various datasets, an analytical framework to estimate demand and supply conditions, and develops a number of scenarios to determine the oversupply both at the national level and by city tiers. It highlights that the adjustment will be a multiyear process with adverse implications for investment and growth. Smaller cities, as well as those in the Northeast region, face more challenging demand-supply dynamics. The key will be to allow the adjustment to take place, while avoiding a too sharp of an economic slowdown.

Keywords: Real estate prices, China, Supply and demand, Economic growth, Property, Investment, cities, market, housing, construction, inventory, sales, buildings, land, markets

JEL Classification: C30, E30, R20

Suggested Citation

Chivakul, Mali and Lam, W. Raphael and Liu, Xiaoguang and Maliszewski, Wojciech S. and Schipke, Alfred, Understanding Residential Real Estate in China (April 2015). Available at SSRN: https://ssrn.com/abstract=2609648 or http://dx.doi.org/10.2139/ssrn.2609648

Mali Chivakul (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

W. Raphael Lam

International Monetary Fund (IMF) ( email )

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

Xiaoguang Liu

International Monetary Fund (IMF) ( email )

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

Wojciech S. Maliszewski

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Alfred Schipke

International Monetary Fund (IMF) ( email )

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

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