China’s Housing Markets

Abstract

House price growth in Chinese metropolises for the last three decades has been impressive, to say the least. Long-term trends, most of which are still intact, have been fueling housing demand. Therefore, it is unlikely that the demand for urban residential units will weaken in the near future. Much of this momentum is backed by fundamental factors such as income growth, urban population growth, and access to capital. However, at the same time, affordability and rental yields have deteriorated over the last few decades. Thus, the risk of housing market bubbles is elevated, and this applies particularly to housing units built about 20 years ago and which do not fulfil the quality demands of the rising middle class today.