Empirical Analysis Of Real Estate Bubble In China

The housing price climbs gradually in recent years. Heated discussion has been on the issue whether there is the existence of the real estate bubble. Therefore, the government carry on a series macro adjustments and controls on the market of the real estate. This paper concentrates on whether the real estate bubble is existence and how to test the real estate bubble and the reasons of real estate bubble. The real estate is a national economy of pillar industry. How to keep real estate health and sustainable development has a crucial practical significance.Starting from the summarizing of bubble economy theory and real estate market and through the analysis on the real estate, it could be judged that the real estate is developing so fast. The indexes of the real estate develop rapidly. It cloud made a pre-judgment of the bubble of the real estate. Next, the paper establishes the real estate model of supply and demand and price by the 1994-2005 data of the real estate in China. According to the model, it could be judged the trend of real estate market. By using the real estate market trend, the housing price developed rapidly. Furthermore, by using the principal components analysis to give power of the real estate indexes by the 1998-2005 data of real estate and the index number of the real estate bubble has been calculated. It cloud be found that the real estate bubble expands constantly. Finally, it also pointes out that the reasons of the bubble in the real estate market and the countermeasures of the real estate bubble is advanced.The paper analyzes the real estate market qualitatively by using a great deal of data and charts. It establishes the model of supply and demand and price. It gives power of the real estate indexes by using the principal components analysis and it avoids artificial influence. The real estate bubble has been measured. From the result of the analysis, it can reflect the real estate bubble in China. The author firstly put forward that it gives power of the real estate indexes by using the principal components analysis and the conclusion is drawn through the empirical analysis in China.