Research Of China’s Major Cities’ Real Estate Bubble

The real estate industry has become a pillar industry of China’s overall economy since housing reform With the fest development of the real estate industry, the related industries also develop fest And real estate industry provides a large number of jobs, improves the living environment of the city. But the rising housing price is beyond the purchasing power of ordinary residents, resulting in a series of social problems. Steadily rising prices has attracted the attention of the whole society. The discussion about the existence of the real estate bubble in academia and the public is unprecedented fierce. The government has implemented more and more stringent control measures for many years, however, housing price is still rising. Under this background, measuring whether there is bubble in China’s real estate market and proposing real estate policy have important theoretical and practical significance.Based on the current situation of the real estate market as well as the merits of the real estate bubble measurement methods, this paper decides to use three indexes (housing price earnings ratio, the total investment in real estate development growth/GDP growth, residential commercial real estate sales area/residential commercial real estate completed area) to measure the real estate market bubble. Based on historical statistics, the values of indexes show that there is bubble in the overall real estate marketIn order to make the study more realistic, this paper divides China’s major cities into A, B, C types, this classification is based on the economy of the city. According to city statistics, the indexes show that there are different degrees of bubbles in these cities of three types. And the real estate market of A cities and B cities is very healthy with no bubbles since 2010. But there are still bubbles in C cities’real estate market.According to China’s national conditions, this paper studies the reasons of real estate bubble from market fectors, institutional and social factors. And this paper proposes the policy recommendations in accordance with China’s national conditions. These policy recommendations refer to land reform, tax reform, affordable housing system, financial regulation, expansion of investment channels, inhibition of excess liquidity, real estate regulation for cities of C type.I hope the analysis and policy recommendations of China’s overall real estate market bubble and real estate bubble in major cities able to play a role in the healthy development of real estate and the control of real estate bubble.