----An Investigation of the Real Estate Market in China`s Major Cities, with a View to Providing Suggestions to Aid its Stabilization.
In 2007, the prices of real estate in many countries increased more rapidly than ever before. The subprime mortgage crisis, which happened in the U.S firstly, has caused a series of effects on the world`s economics. The real estate market, as one of the basis parts of a nation`s economics, influences one nation`s economic directly. Understanding what factors caused the high real estate price is the key point for one nation to develop its economic better. Although the factors which affected the housing prices are complicated, some measures can be used to resolve the problem of the high real estate prices. The aim of this paper is to investigate the reaction of people when they are facing the high housing prices in Chinese major cities, such as, Beijing, Shanghai, and Guangzhou. Another purpose of this study is to examine the factors influencing real estate prices, and find out some solutions to stabilize the housing prices.
The real estate market, as one of the basis parts of a nation`s economics, has been influenced by financial crisis (Muller, 2009).This review will evaluate some literature on real estate prices in different countries, and the main factors that caused this phenomenon of high prices. Firstly, this paper will review the trends of real estate prices from some academic articles. Secondly, the comparison of different countries` real estate market and the main factors affect the real estate prices will be addressed. The experiences of some countries will be compared with China`s present situation. And the application model of real estate market also will be reviewed, such as the CRE price measures (Hobijn, 2011), and the “hot” market and “cold” market theory (Krainer, 1999). Finally, this paper also will explore the questions after reviewing some literature. Although the causes of the high real estate prices are complicated, a clear understanding and grasp of the real estate market can be built after comparing some literature.
The trends of real estate prices changed rapidly from 2005 to 2012. Earlier studies based on real estate market showed that the real estate prices were low in 2005 in many countries, which was because of the low competitive market. However, the prices of real estate market increased rapidly from the third quarter of 2006 to the last quarter of 2007 in some Western countries, such as the U.S, Ireland, the UK, and Germany (Muller, 2009). In Muller`s research(2009), the data showed that the U.S reached the highest point of house price index in the second quarter of 2007, and the house price in the UK peaked in 208 in the last quarter of 2007. However, the price of real estate in Germany did not have any house price bubble during 2006 and 2007. Actually, the index of real estate price in Germany decreased slowly in 2007. On the other hand, some literature predicted that the price of real estate market would soon fall. Blanchflower (2010) found that the house price in the UK had fallen about 29% from its highest point in the first month in 2007. Although this study shows the recent trend of real estate price, it is rather restricted because this study is mainly focus on the real estate market in the UK.
The condition of different nations also causes the difference of the real estate prices. Muller, Almy, Engelschalk (2009) found that the supply of houses was low and the demand for houses is high in the U.S after the financial crisis in 2007. And the high prices are caused by excess mortgage lending activities. They further investigated that some countries have worse situation than the U.S, while some countries have not experienced the high prices of the real estate market. For instance, the prices in Germany decreased after the financial crisis, meanwhile, the prices in Spain reached the highest...