2017.11.1706:28:00UTC+00China Needs To Take Addl Steps To Address Imbalances In Housing Market

China's government should take additional measures to address the fundamental imbalances in the residential housing market, a working paper by the International Monetary Fund staff and academics from the Tsinghua University said Thursday.

"The government should expand its toolkit to include additional macroprudential measures and push forward reforms to address the fundamental imbalances in the residential housing market," the working paper titled "Assessing China's Residential Real Estate Market" published by the IMF, said.

If house prices rise further beyond "fundamental" levels and the bubble expands to smaller cities, it would increase the likelihood and costs of a sharp correction, the paper cautioned.

Such a development would further weaken growth through slowing real estate investment and private consumption, and pressure financial stability.

The central government and financial regulators can affect the housing market through financing conditions and macro-prudential tools for mortgage lending.

The paper said the government should consider macro-prudential policies that have proven effective in containing housing market risks in other countries.