The World Bank said in a report that worries about a looming bubble in China’s real-estate market are misplaced, as gains in home prices have not dramatically outpaced rising incomes on a nationwide level.
It also said that lower Chinese interest rates have eroded monthly housing payments, adding to affordability.
The global lender said in its China Quarterly Update report for November: "Serious asset price bubbles are unlikely to be imminent".
Still, the World Bank cautioned that there was a lack of clarity on home affordability and that better data were needed.
"The real-estate market and policy making towards it would benefit strongly from better, more representative data on property prices and how they compare to incomes," it said.
MarketWatch said the World Bank also recommend stepped up banking oversight, saying regulators should be proactive in preventing the misallocation of credit. It cited rapid lending growth by smaller banks with questionable risk-management systems as dangers.