Was China’s Housing Boom a Bubble?

This article investigates the factors influencing nationwide and city-level house price trends in China during the 2000s and early 2010s, considering the country’s significant structural transformation and urbanization. The analysis reveals that "fundamental forces" effectively explain house price appreciation at the national level and in most cities, with Beijing and Shanghai being notable exceptions. Income growth is the primary driver of rising house prices, while population growth also plays a significant role. However, in many cases, the impact of population growth on house prices is mitigated by an accompanying increase in land supply. China’s unique housing market landscape, particularly "hukou" migration restrictions, shapes house price dynamics and the responsiveness of migration to income growth, thereby amplifying the impact on house price appreciation.