An Research Based On The Real Estate Bubble Of The Financial Risk Prevention

Since 1998, China had implemented the reform of commercial housing, real estate has been developed rapidly and became a pillar industry of national economy, there is a problem accompanied by the rising prices of real estate. Take Shanghai as an example, the real estate investment and real estate prices had rose more than 3 times from the year 1998 to 2009, along with the rapid development of Shanghai real estate, the real estate market there have been overheating and the bubble was forming. As a capital-intensive business, the real estate industry has closely linked with and financial industry, so the real estate bubble could rise a huge impact on the financial stability of a country or a region.Based on the phenomena above, after reviewing the mechanism of real estate prices, the real estate bubble and the financial crisis caused by real estate bubble, and recalling three real estate bubble and the financial crisis, particularly subprime mortgage crisis of the United States,2007, the paper study the real estate market and real estate prices factors, and use the econometric methods in order to demonstrate the existence of the Shanghai real estate bubble, then measure the degree of it. After that, the article study the relationship between real estate and the financial crisis, not only demonstrating the burst of real estate bubble could trigger the financial crisis from a theoretical model, but also establishing the Shanghai financial risk indicators, and using empirical analysis, demonstrated the changes in the prices of real estate have a strong impact on financial stability, so that we should pay more attention on the real estate bubble.Finally, the paper analysis the success stories of the international community which prevent the financial crisis caused by the real estate bubble, and give three aspects of the preventive measures at the current situation in our country form the financial support, the bank and the government policy.