Overheated Housing Markets of Top-tier Cities in China

Years ago, people predicted that the bubble of Chinese housing market would burst and start collapse from first-tier cities, Beijing, Shanghai, Shenzhen, Guangzhou, which are the most populated and most economically important metropolitans. But unexpectedly, housing markets of the first-tier cities have heated up recently. However, in most of second-tier cities of China, such as provincial capitals, as well as third-tier cities, the housing markets did not change much and even cooled down in some areas.

People feel surprised that housing price surged over 50 percent over the last year in Shenzhen. To deeply analyze what drives the soaring housing markets of first-tier cities, in addition to looking into common macro data, such as GDP and CPI, investors may also need to consider Chinese characteristic data, such as personal housing provident fund loan rate, which is a commonly used interest rate other than mortgage rate in China.

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