Housing mortgage and housing transaction in China : bridging the missing link

Market reforms have successfully transformed socialist China over the past two and a half decades. In 2004, China recorded a GDP of about RMB 16 trillion yuan, making it the sixth largest economy in the world. Goldman Sachs has predicted that, if the current trend continues, China would become the world's largest economy by 2035, five years earlier than its previous assessment. Since the early 1980s, China has gradually restructured its housing system. Housing has become a commodity that has an exchange value and that individual households can buy and sell in a market. This paper examines current development and changes in China's housing mortgage market. It discusses some key factors leading to its tremendous growth in recent years and highlights some institutional constraints that have inhibited its development. The paper describes how spontaneous market-based solutions have emerged in China's property intermediary service sector that address these institutional barriers and improves the overall efficiency of transactions in housing mortgage market.Department of Building and Real Estat