China's Housing Market: Is a Bubble About to Burst?

Abstract

The recent meltdown of the U.S. housing market triggered a financial crisis that evolved into the worst recession since the Great Depression. Other mature countries such as Ireland and Spain also have suffered severe housing problems in the past few years. Those difficulties continue to be a drag on economic growth. In the United States, for example, the residential housing market is still seeking to recover to a steadier condition, and home prices have yet to return to their historical trajectory in many regions. The current "shadow inventory" of delinquent and foreclosed homes is taking time for the market to absorb, which impedes employment growth in construction and related sectors and thus overall economic growth.