Study On The Real Estate Bubble In Wuhan City

As an important component of the society’s national economy, the healthy and stable development of the real estate market can effectively stimulate healthy and stable development of socio-economic. With the rapid social and economic development as well as dramastically development of Wuhan City real estate, real estate prices also have a very substantial rise which lead to the real estate bubble. Although the Wuhan municipal government has taken several policies to promote the healthy development of the real estate market and solve the housing problems of low-income people, but the high temperature of the real estate market is still high and real estate prices are still hovering.In this dissertation, based on the reality of the real estate market in Wuhan City and theory of the real estate market supply and demand, we study the fundamental value and bubble of real estate.This paper includes the following components:first, we use indexes of supply, demand and price these three aspects respectively to study the the real estate bubble extent of Wuhan City; second, by balancing the expected utility of consumers in the real estate market and the maximizing of the real estate profits, we can calculate the fundamental value of real estate goods in the real estate market.Then we use Wuhan City as an empirical example, Wuhan City, use its relative residential market data, and get the fundamental value and the bubble rate of the Wuhan residential market. Combined with the correlation analysis of the real estate bubble to analyze the causes of the real estate bubble.Our result shows that:in our one-year-lag estimation from2003to2010, all years are positive around10%except in2003and2009are negative, and in2005and2007bubble value are larger approximating20%.But in the two-year-lag estimation, almost all bubbles value from2004to2010are more than10%.Wuhan City, the residential market in2003-2010obvious housing bubble, especially large in the2005to2008during the bubble, bubble degrees after2008tends to decrease, but overall is still in the bubble last in the range, combined with the realities of Wuhan City, Wuhan City real estate empirical results of the policy recommendations:to improve the protection of housing system to expand the applicability of affordable housing; strict control of the land market, to increase effective supply; Elimination the non-market factors, curb the speculative demand; market information transparency to combat market manipulation.