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Assessing China’s Residential Real Estate Market

Author

Listed:
  • Ding Ding
  • Xiaoyu Huang
  • Tao Jin
  • Mr. Waikei R Lam

Abstract

China’s real estate market rebounded sharply after a temporary slowdown in 2014-2015. This paper uses city-level data to estimate the range of house price overvaluation across city-tiers and assesses the main risks of a sharp housing market slowdown. If house prices rise further beyond “fundamental” levels and the bubble expands to smaller cities, it would increase the likelihood and costs of a sharp correction, which would weaken growth, undermine financial stability, reduce local government spending room, and spur capital outflows. Empirical analysis suggests that the increasing intensity of macroprudential policies tailored to local conditions is appropriate. The government should expand its toolkit to include additional macroprudential measures and push forward reforms to address the fundamental imbalances in the residential housing market.

Suggested Citation

  • Ding Ding & Xiaoyu Huang & Tao Jin & Mr. Waikei R Lam, 2017. "Assessing China’s Residential Real Estate Market," IMF Working Papers 2017/248, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2017/248
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=45337
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    Citations

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    Cited by:

    1. Ding Ding & Weicheng Lian, 2018. "The Long-Run Trend of Residential Investment in China," IMF Working Papers 2018/261, International Monetary Fund.
    2. Mr. Fei Han & Ms. Emilia M Jurzyk & Wei Guo & Yun He & Ms. Nadia Rendak, 2019. "Assessing Macro-Financial Risks of Household Debt in China," IMF Working Papers 2019/258, International Monetary Fund.
    3. repec:cuf:journl:y:2017:v:18:i:1:dinghuang is not listed on IDEAS
    4. Funke, Michael & Leiva-Leon, Danilo & Tsang, Andrew, 2019. "Mapping China’s time-varying house price landscape," Regional Science and Urban Economics, Elsevier, vol. 78(C).
    5. repec:zbw:bofitp:2017_021 is not listed on IDEAS
    6. Linxi Chen & Ding Ding & Rui Mano, 2018. "China’s Capacity Reduction Reform and Its Impact on Producer Prices," IMF Working Papers 2018/216, International Monetary Fund.
    7. Funke, Michael & Leiva-Leon, Danilo & Tsang, Andrew, 2019. "Mapping China’s time-varying house price landscape," Regional Science and Urban Economics, Elsevier, vol. 78(C).

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