Legal Research On China’s Real Estate Bubble

Within the traditional Chinese culture, housing is an essential part of our daily life. Protecting citizens’right of living, is not only benefit to social stability, but also conducive to the development of economics.It’s also more than ten years, since our country implements the reform of the housing system from thebeginning stage of20th century. After the rapid development, the real estate industry has become one ofpillar industries for Chinese economic. Commercial residential buildings gradually occupy the leadingposition of the housing market. The housing is no longer just a means on living; it is a commodity with thevalue of investments. In recent years, the house price is still increasing, though the government has adopteda number of management policies. Additionally, the people’s discontent about the high prices is also rising.The explorations and researches about the seriousness of the existence of the real estate bubble havebecome a hot topic in academia.This paper analyzes the development process of the real estate. According to the features of differentstage real estate, the development process of real estate can be divided into three different stages includingrapid development, rapid development and serious bubble. Comparing to the real estate bubble of USA,Japan, Thailand and Hong Kong, we can demonstrate that if the Chinese real estate exist bubble in terms ofthe house price to income ratio、housing rental ratio、the proportion of growth rate of land price and growthrate of GDP three indicators and so on. The major reason of the bubbles is that loose monetary environmentand the investment enthusiasm, and the bank is also to easing monetary policy, issuing a large number ofreal estate business loans and housing loans to individuals. The results of such a vicious cycle are that theprice of the house is far away from the its real value, and the serious real estate bubble is induced.The estate is a leading industry of the national economy, and if there are problems occurred on this industry, the consequences will influence into various aspects of our society. A large number of middleclass are facing bankruptcy. Due to the downturn of the real estate industry, Individual housing loandelinquencies will increase, the value of land mortgage banks shrink, increasing social inequality, socialwealth, serious inflation. In addition, the real estate bubble would cause serious residential flats, andresources waste.In this case, the thesis proposes a solution for addressing the above problems from a legal point ofview. To enhance the legal and regulatory, this solution for contains the land transfer market, constructiondevelopment and market liquidity. Changing the local government for financial dependence on land,increasing the local government revenues by the property tax. Standardize the process of land transfer, thereal estate development enterprises use loan funds for special supervision. To expand the scale of thenational housing, perfecting the system of affordable housing application. Increasing the size of thenational affordable housing, in order to establish well-functioning real estate market, it truly become apillar industry of the national economy.