Global Asset Bubbles and China’s Real Estate Market

来源: CHINA FOREX 2016 Issue 3

Almost all major economies around the world have undertaken some form of quantitative easing since the US subprime crisis. From the second half of this year,low interest rate and even negative interest rate policies have been the norm. Meanwhile,the US Federal Reserve's plans to raise interest rates have been largely put on hold after a brief move in that direction. Global asset prices began a gradual rise after a period of severe volatility. Prices on global stock,bond and real estate markets have held at very high levels,though bulk commodities have traced a divergent pattern. Although China remains in a transitional period with slowing growth,domestic real estate prices have shown a remarkable rise over the past two years,particularly in first-tier cities. The following discussion is an effort to assess the risks in China's real estate market against this global background.

Zhong Wei,deputy editor-in-chief of China Forex Magazine,speaks to Dong Fan,Director of Real Estate Research Center at Beijing Normal University,and Lin Caiyi,chief economist of Guotai Junan Securities.

Zhong Wei: Welcome to this round table discussion. Prices of stocks,bonds and real estate have been moving steadily higher,though global asset prices have undergone significant turbulence since the US Federal Reserve announced its tapering of quantitative easing and a somewhat hesitant move towards higher interest rates. More recently,global asset prices have advanced once again. Taking the real estate market as an example,housing prices in key cities,including those in China,all hit new highs. In your opinion,is China*s real estate market overheated? Is this unique to China or just part of a global trend in the real estate market?

Dong Fan: It is not correct to say that all global asset prices are rising,because the real estate markets in many countries have been relatively stable. In some markets,including Spain,Portugal and Greece,prices have been quite weak. We have seen sharp increases in housing prices in Australia,Canada,the US,the UK and parts of China in recent years. In the past year,housing prices in China's first-tier cities and most of the second-tier cities increased substantially. Prices in some markets,such as Shenzhen,reached surprisingly high levels,while those in the third- and fourth-tier cities remained weak.

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