Longview Letter:  Is China a bubble? Part 2 - Housing

Chris Watling | Longview Economics | 14 April 2011

Summary and conclusion

China’s residential property market is clearly expensive in many of its key cities. Price-to-disposable-income ratios of up to 20x, rental yields significantly below the cost of funding, as well as widespread evidence of speculation all create a high risk of a cyclical pullback. 

Structurally, however, while residential house prices may be vulnerable near term, over the long term, the uptrend would appear to be underpinned. In particular, and as a resul...