World Bank East Asia and Pacific Economic Update April 2017

Title World Bank East Asia and Pacific Economic Update April 2017
Author Name World Bank

Beginning on page 39, the World Bank reports on the current implications that the real estate sector has on financial stability in East Asia and the Pacific. The Group notes that the region has generally seen low interest rates and continuing residential shortages due to rapidly rising real incomes. This has had the effect of driving up housing prices in several of the region's larger economies. 

The region's banking sector exposure to real estate has continued to increase at a moderate pace. This has been characterized by a slowly rising share of total bank loans that have gone toward real estate purchases, with the majority of these loans being designated for residential property. 

The World Bank also reports that investors are increasingly viewing the region as an attractive opportunity for consistent yields, particularly in the residential market. The report cites the particular case of China's increasing market for real estate investors--noting that REI in the country has tripled post-crisis (2009-2016). 

Overall, the Group concludes that the region has broadly manageable risks and sees no immediate causes for concern. Save for a few exceptions, household assets far outweigh household debt in most countries, which bodes well for the financial systems in the region as the increase in RELs have mostly been due to residential mortgages. 

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