Research On Financial Risks Caused By Bubbles In China's Real Estate Market

Since the housing system reform in 1998,China's real estate market has made considerable progress.Real estate development investment,commercial housing transaction volume and Per Capita Housing area has made a great leap forward.However,structural contradictions still exist in the real estate market.In recent years,China's real estate market has developed rapidly,and real estate prices have also risen.At present,China's real estate market bubble has accumulated to a certain extent,capturing the industry spotlight.In order to prevent the housing bubble from bursting and avoid the systemic financial risks caused by it,Xi Jinping,the general secretary of the Communist Party of China,pointed out in the report of the 19 th session of national congress of CPC that insisting on housing and housing is not speculation,which further emphasized the importance of regulating the real estate market.Based on a large number of domestic and foreign literatures,this paper explores the induced mechanism and correlation between the real estate bubble and the real estate financial risk index.It also points out that there is a certain induced mechanism between the growth and accumulation of China's real estate bubble and the growth of real estate financial risks in macroeconomic development.By analyzing the data index of real estate development investment,sales and market prices,this paper expounds the current situation of China's real estate market bubble and explores the causes and the root of the real estate bubble.To measure the real estate bubble,this paper will build a revenue recovery model based on the method of Equal Principal and Interest Method.Combined with the actual situation,this paper collates the indicators of urban per capita disposable income,urban per capita living area,down payment ratio,real interest rate and loan period to figure out an average price of the real estate market.Then exam the real estate market bubble degree by comparing actual average price of commercial housing with the estimated theoretical price.For the measurement of real estate financial risk in China,this paper chooses 10 indicators from 6 categories such as capital and credit status and bank asset quality to build real estate financial risk indicators,and uses factor analysis method to measure them.At the same time,this paper explains the induced mechanism of the real estate bubble and the real estate financial risks,and combine the real estate bubble degree with the real estate financial risk index to analyze the relationship between these two.The conclusion is that China's real estate bubble can significantly lead to real estate financial risks,and these two are highly similar in the trend of increase and decrease.Finally,by using the results mentioned above,this paper gives suggestions on the real estate market regulation,the reform of the real estate market system,the improvement of the financial system and the strengthening of financial supervision,including how to reduce and avoid the real estate financial risks,avoid the real estate financial risks caused by the real estate bubble,and promote a steady and healthy real estate market in a long term.