Asset Preference In China And Evaluation Of Housing Price Bubble

Since real estate innovation in 1990s, welfare house system in the planned economy period is gradually replaced by housing consumption. House prices have played an essential role in adjusting market supply and demand. The development of China’s real estate industry in the past twenty years is so fast that the commercial housing prices in the Chinese capital and other cities were sure to keep rising; the prices in China relative to per capita income are far high. From 1998 to 2013, the annual average price of the commercial housing prices rose by 22.8%during the same period that is 2.5 times of the per capital income which is 9.6%. At the start of the decade, it results in the discussion of the bubbles in real estate market. The majority of scholars compare the ratio of the price and income. There undoubtedly has been a bubble in the real estate. In the period of the adjustment of the price, they ignored the factor that is the choice preference of household assets. The article based on the choice preference in the household assets, trying to discuss the existence and measurement of the bubbles in the real estate. The full text is divided into five parts.The first chapter is the introduction which firstly introduced the thesis research background and the significance of the topic, and then it defines the relevant concepts and summarizes the research achievements of predecessors.The second chapter is literature review. Overview of academic research of the measurement of housing bubble and portfolio selection at home and abroad.The third chapter is portfolio selection model based on the heterogeneity of asset and preferences. When we choose the family assets ranging from pure financial assets expanded to real assets, the differences among functions of assets would be surfaced, and make households do not fully comply with asset selection of expected revenue-risk. It means that households have a preference heterogeneity in asset selection process, that is, the expected return, risk and preferences together constitute the crucial factors of households Portfolio,when add the factor of preference to the study of portfolio selection, they establish a corresponding portfolio selection model has become the focus of our research in this chapter.Then select the real estate as the representation of physical assets and the stock as financial assets, and use a theory "Revealed preference theory which is fund by Samuel Sen.,constructs the indifference curve of Chinese families in the selection of real estate and stock assets. The results show that the residents in our country have a strong preference for real estate assets, this conclusion is in keeping with our real feelings.The fourth chapter summarizes the study of the price equilibrium decision in the real estate market. On the basis of the above theoretical model, the real estate market demand function is introduced by the using indifference curve on the choice of Chinese household assets. By using the parameter Q (Commercial housing area per average home) and P (average price in the real estate), the real estate market supply function is constructed with the panel model. When supply curve meets demand curve, then the point "p*" is the equilibrium price.The fifth part introduces the assessment and evaluation of the housing bubble size. It empirical analyzes and estimates the China’s real estate price bubble in 35 metropolises combined with the real estate market data, and compare with the relevant conclusions of existing study.Research shows that:China’s real estate bubble does exist, and the degree of difference among different area is obvious.Tier economically developed cities have more serious bubble compare with others, and some less developed western cities are not obvious.Tier cities bubbles generated earlier than second-tier cities, bubbles in second-tier cities mostly occurred after 2010,and the bubbles of the first-tier cities are also significantly higher than the second-tier cities.By the year 2010,the majority of second-tier cities have generated housing bubbles, China’s housing bubble has since turned to overall situations from local.