The State of China’s Urban Housing Markets

The state of China’s housing markets has weakened considerably over recent months and quarters. The primary cause is a dramatic oversupply that has been building over the past couple of decades. Since the turn of the century, we estimate that the growth in the supply of homes in urban areas has been about 17% greater than the growth in the number of households living in those urban areas. The magnitude of the Chinese housing market, combined with the large share of household wealth invested in the sector and the development of a highly leveraged land finance system, helps make the future path for the housing market of great importance to China. It is the economic scale of China that makes this issue important to the rest of the world.