(Yicai Global) July 30 -- The resident leverage ratio in many Chinese cities is growing rapidly in a rise fueled by surging housing prices.

The ratio in some cities even exceeds 100 percent, much higher than the global average, mostly because fast-growing home values have spurred residents to increase their leveraged investment.

Many statistical methods can calculate this debt ratio, but two metrics are frequently used. One is to use the quotient of the household loan balance divided by the gross domestic product as the leverage ratio, which is called the household leverage ratio, while the other is to use that of the household loan balance divided by the household deposit balance as the leverage ratio, known as the leverage ratio of resident funds.

Yicai Global has looked into the household loan balance and GDP in 29 cities to work out their household leverage and leveraged ratios of residents' funds. Wuhan, Zhengzhou, Xi'an and Tianjin were excluded from this study as they have not released complete data.

Household leverage ratios in 11 cities were higher than the global average last year, while those in five were more than 80 percent, which represents a high level, Yicai Global found, based on the statistics. Hangzhou's 103.2 percent put it in first place, followed by Xiamen at 96.3 percent and Wenzhou with 91.1 percent. The ratios in Haikou and Shenzhen both topped 80 percent.

The leverage ratios of resident funds in eight cities exceeded 100 percent last year. The proportion in Xiamen was 172.2 percent, followed by Shenzhen at 144.4 percent and Hangzhou with 136.7 percent.

The household leverage ratio in urban areas is rising rapidly mainly because the household loan balance is surging. Debt growth is outpacing income increases, with the gap between these further widening in the last two years.

Hangzhou is an apt example. The growth of the household loan balance in the lakeside city home to tech giant Alibaba Group Holding was 33.1 percent, 23.8 percent and 44.5 percent, respectively, between 2016 and last year, while the rates of increase of household deposit balances were a mere 11.5 percent, 2.1 percent and 17.6 percent during the same period. Loan balances are thus ballooning and outstripping the growth of deposit balances. Housing prices in Hangzhou have been skyrocketing since 2016.

China's national average household leverage ratio has also risen rapidly in recent years. It climbed to 49 percent at the end of 2017 from 17.9 percent in 2008, but this is still lower than the 62.1 percent global average, China's central bank said in a November report.

Editors: Tang Shihua, Ben Armour