Measurement Of Real Estate Bubble And Analysis Of Its Influencing Factors

Since the deepening reform of the housing system in 1998, our country’s real estate market has experienced ten more years of rapid development. Each region faces the real estate investment boom, and increasing house price far exceeds the ordinary people’s ability to pay. This overheating real estate phenomenon once aroused the debate about the current housing bubble is too big or it also has the space to rise. However, following China’s economy entered into a structural adjustment period in 2014, the gap of real estate market between first, second-tier cities and third, fourth tier cities starts getting bigger. Compared with the still hot scene in first-tier cities, the third and fourth-tier cities’ housing market is experiencing high stock, decreasing price and recovery failure, which further increased the risk of oversupply in real estate market and the birth of bubble. Therefore, having a comprehensive understanding of the third and fourth-tier cities’ real estate market, analyzing further about their bubble have an important practical significance in promoting the healthy development of urban real estate market.Firstly, on the basis of having a review about real estate bubble theory and its influencing factors in the domestic and abroad, this paper summarizes the basic concept of the real estate bubble. Secondly, on the foundation of some relevant theory, this paper selects 6 referring indices as clustering factors from three aspects:the city economic strength, the level of real estate market development and financial markets development, and then carries on the clustering analysis to 14 cities. Based on the conclusion, we elect 4 cities from 14 members whose comprehensive performance is best. This paper describes the housing market current situation in detail from 3 aspects, namely, the investment in real estate development, the housing price and the demand for real estate. Again, after the calculation of 4 indices:the ratio of real estate development investment in total fixed asset investment, the ratio of housing price growth rate to actual GDP growth rate, the ratio of floor space under construction to floor space completed, housing price to income ratio, which measure the extent of housing bubble, we calculate the weights of four indicators using factor analysis method so that we can comprehensively measure the level of real estate bubble in four major cities during 1998-2014. The study indicates that the bubble of the four cities has begun to exceed alert line since 2007. Then, we analyze the affecting factors of housing bubble using the method of gray correlation analysis, and find that the urban population and per capita disposable income are the main factors affecting housing bubble. Finally, according to situation analysis and research findings, this paper proposes some policy recommendations such as to establish a sound real estate market information system, improve the construction of affordable housing, respond actively to the current housing market, strengthen the regulation of real estate market.