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Are House Prices Rising too Fast in China?

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  • International Monetary Fund
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    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.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 10/274.

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    Length: 31
    Date of creation: 01 Dec 2010
    Date of revision:
    Handle: RePEc:imf:imfwpa:10/274

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    Related research

    Keywords: Housing prices; China; Demand; Real estate prices; Price increases; Banking sector; Loans; Economic models; mortgage; land sales; mortgage loan; mortgage interest; land prices; real estate investment; mortgage interest rate; mortgages; homeownership; mortgage market; real estate markets; mortgage loans; housing markets; housing affordability; real estate loan; residential real estate; mortgage payment; second mortgage; mortgage rate; housing loan; mortgage rates; second mortgages; home mortgage; mortgage applications; housing mortgages; mortgage debt; construction costs; real estate sales; mortgage lending; real estate developers; mortgage financing; property developers; real property; home mortgage applications; mortgage interest rates; property values;

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    Cited by:
    1. Yu-Fu Chen & Michael Funke & Aaron Mehrotra, 2011. "What Drives Urban Consumption in Mainland China? The Role of Property Price Dynamics," Working Papers, Hong Kong Institute for Monetary Research 152011, Hong Kong Institute for Monetary Research.
    2. Chen, Yu-Fu & Funke, Michael & Mehrotra, Aaron, 2011. "What drives urban consumption in mainland china? The role of property price dynamics," SIRE Discussion Papers, Scottish Institute for Research in Economics (SIRE) 2011-50, Scottish Institute for Research in Economics (SIRE).
    3. Jing Wu & Yongheng Deng & Hongyu Liu, 2014. "House Price Index Construction in the Nascent Housing Market: The Case of China," The Journal of Real Estate Finance and Economics, Springer, Springer, vol. 48(3), pages 522-545, April.
    4. Roland Döhrn & Philipp an de Meulen & Tobias Kitlinski & Torsten Schmidt & Simeon Vosen, 2011. "Die wirtschaftliche Entwicklung im Ausland zur Jahreswende 2010/2011 - Aufschwung setzt sich fort – Divergenzen bleiben groß," RWI Konjunkturbericht, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 34, 03.
    5. Matthew S. Yiu & Jun Yu & Lu Jin, 2012. "Detecting Bubbles in Hong Kong Residential Property Market," Working Papers, Singapore Management University, School of Economics 31-2012, Singapore Management University, School of Economics.
    6. Zhang, Yanbing & Hua, Xiuping & Zhao, Liang, 2012. "Exploring determinants of housing prices: A case study of Chinese experience in 1999–2010," Economic Modelling, Elsevier, Elsevier, vol. 29(6), pages 2349-2361.

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