Are House Prices Rising Too Fast in China?


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Date Published 2010
Primary Author International Monetary Fund
Other Authors
Country China


Sharp increase in house prices combined with the extraordinary Chinese lending growth during 2009 has led to concerns of am emerging real estate bubble. We find that, for China as a whole, the levels of house prices do not seem significantly higher than would be justified by underlying fundamentals. However, these are signs of overvaluation in some cities's 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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