Degree Of Real Estate Bubble Of China Based On Fundamental Housing Price Model

Under the background of rapid, large-scale urbanization, real estate industry has gradually become the pillar industry in China, whose success or failure is related to the growth of other sectors in a country. But because of the rapid rise in commercial housing prices, a large number of rigid rigid demanders will be squeezed out of the real estate market, which easily leads to the formation and expansion of the housing bubble. The real estate bubble has great harm to the whole country, which may have greater impact on the global political, economic operation. Is there the real estate bubble in Chinese real estate market? Since 2004, the domestic scholars began to debate on the issue, but the vagaries of the real estate market makes Chinese real estate bubble debate more intense, and even scholars get the opposite conclusion. Therefore, in order to avoid harm of the bubble to the national economy, we need to use appropriate methods to estimate degree of real estate bubble.On the basis of previous studies, this research idea is:Firstly, summary the real estate bubble theory, which includes definition, manifestation, operating mechanism and harm.Secondly, review the research advances in theoretical-price method and modify the equilibrium model, including two aspects (developers and banks), under the condition of the presence and absence of financial support.Thirdly, use the modified model to measure the degree of property bubble in China and use this model to measure the degree of the real estate bubble in China.Finally, put forward the policy suggestion.The main conclusions are as follows:(1) Via further study on domestic and international interrelated documents, under the condition of the lack of statistics, we can start from the definition of real estate bubble, build the theoretical price model that adapts to China’s situations, and then use this model to measure real estate bubble in China.(2) This paper expounds definition, manifestation and theoretical basis of the real estate bubble in detail:real estate bubble is caused by real estate speculation, which is the deviation degree of real estate price and basic value. Real estate bubble manifestations include boom-bust prices, a large number of bank loans, high vacancy rate and so on. Serious real estate bubble is fatal to the economy, even cause the social crisis.(3) To some extent, partial equilibrium competitive model could better meet the demand of accurate measure of real estate bubble. Domestic scholars turn their attention to this method theory used for measurement of the real estate bubble, in order to get consistent, general theoretical results.(4) This paper constructs the modified model, including two aspects (developers and banks), under the condition of the presence and absence of financial support to separately calculate property intrinsic value, property intrinsic value which contains rational bubble, the bubble degree and the irrational bubble degree. Our results are the followings:during the stage without financial support, the degree of bubble in real estate market was about 50-80%.However, compared with the violent fluctuation of bubble degree in HK real estate market, the bubble degree of the mainland was only about one-third of the HK’s. Thus, all in all we could infer that the bubble in the real estate market of mainland has never collapsed. Under the control from government and the whole economic environment, the irrational bubble was always in a scale of reasonable.(5) Later research can be improved from the following aspects:Detailed data selection, considering the regional real estate market, the difference of pricing mechanism between different types of residential.