China and International Housing Price Growth

Abstract

We document Chinese effects on international residential property price growth. We show that faster growth of the housing prices is associated with larger declines in recent past growth of China’s GDP, larger increases in China’s savings rate, or stronger rise in China’s risks. These results are consistent with the notion of Chinese investing in overseas property markets when faced with less promising investment opportunities at home and when they have the means to invest offshore. These effects are stronger for countries where English is the primary spoken language, with better tertiary education quality, and that exhibit lower correlations between local property market price growth and China’s interest rate.