Effects Of Heterogeneous Beliefs On Real Estate Price In China

Since the monetization reform of real estate in our country in1998, China’s real estate prices began climbing, and constantly refresh record. Rising real estate prices, investors found the huge potential profits in the real estate market,so they begin to enter the real estate market. Increasingly expansion of speculative demand, not only let the real estate prices rise, more result in the bubble of China’s real estate price Based on the two basic characteristics of China’s real estate market, investors heterogeneous beliefs and short sell constraints, from the perspective of heterogeneous belief, analyze the reasons of the rising house prices, and reveal the formation mechanism of the bubble of real estate price.In this paper, the author card and review the existing research of heterogeneous belief asset pricing theory and the influence factors of real estate price, and expounded the theories foundation of heterogeneous belief asset pricing. Then through the above analysis found that heterogeneous beliefs can affect asset prices, So in order to explain the founction of heterogeneous belief in the process of asset pricing, this paper adopt the two step test, Engle and Granger put forward inl987, through study found that there was a long-term positive cointegration relationship between heterogeneous beliefs and real estate price, and heterogeneous beliefs also can pull up real estate price in a short term, this can analyze the question of house prices in our country from a new angle. High price will lead to potential price bubble, so based on the vector-autouregressive and log-linear asset pricing framework estimated the bubble of real estate market in china, and built a VAR model to analyze the relationship between heterogeneous beliefs, inflation and the bubble of real estate price in China, through study found that they are important influence factors in the forming process of the bubble of real estate price in China, but heterogeneous beliefs can explain the bubble of real estate piece in China more reasonable relatived to the inflation. At last the author give some corresponding suggestions based on the above research and analysis.