The Emerging Mortgage Markets in China The evolution of the mortgage markets in China The emerging and rapidly growing mortgage market in China has become a powerful financial engine for booming housing development and sustained economic growth since the turn of the century. The development of the residential mortgage market in China has been a strategic element of the household-ownership oriented housing reform orchestrated bythe central government of China. The housing reform has created residential mortgagelending business, propelled the development of Chinas mortgage market from its negligible status in 1997 to more than US $200 billion by2004, and made China the third-largest mortgage market in Asia.
The emergence of residential mortgage-lending has made the mortgage market the dominant growth stimulus for the Chinese banking industry. Table 1.1 presents the annual growth of the mortgage market in China from 1998 to 2004. Despite the impressive 112 compound annual growth rate from 1999 to 2004, Chinas mortgage lending still onlyaccounts for 13 of GDP, which is still quite low compared to 65 for Singapore, 50 for Hong Kong, 38 for Korea and 58 for the US in 2002. The evolution of Chinas housing market is quite different from that in North America and Europe, including those transition economies in the post- Communist countries.1 This section presents the background and historyof the residential housing and mortgage markets in China.