Are Housing Prices Rising Too Fast in China?
AbstractSharp increase in house prices combined with the extraordinary lending growth in Mainland China 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. [HKMA WP10_08] [http://www.info.gov.hk/hkma/eng/research/working/pdf/HKMAWP10_08_full.pdf
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Date of creation: Feb 2011
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house price; price misalignment; financial stability; leverage cycle; China; Hongkong; Asia;
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"Assessing High House Prices: Bubbles, Fundamentals, and Misperceptions,"
NBER Working Papers
11643, National Bureau of Economic Research, Inc.
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