The Form And Prevention Of Estate Bubble In China

Real estate industry belongs to the basic and superior industry and now it is in a dominant position. Due to its strong relevance with other industries, it has been the main industry of the whole economy.With the transform from planned economy system to market economy system after reformation and open real estate industry has changed largely from distributing houses freely in 1980s to selling houses after 1998, the consumers' notion has been changed thoroughly. Real estate industry has brought along the society aggregate demand. But since 2002,the price of property in some cities has rised too high for common people to afford.In March 2005,the State Council talked over and passed The Principal Points of the State Council's Work in 2005.The conference emphasized that it is of great significance for maintaining a good momentus of growth in the national economy to exercise strict control over the scale of the real estate and urban construction .A Notification was also released on stabilizing the house price.However more and more foam is emerging in the development of real estate industry. In such circumstance this article illustrates the present conditions of real estate industry including large amount of foam and reasons why this condition appear and puts forward to some proposes and methods.The author believes that the foam has appeared in some parts of the country even though it hasn't appeared in the whole industry. Unless this condition should be adjusted in time, the whole industry will produce more problems and will further influence the health of the whole economy.This article first simply introduces what the "bubble" means, next, we focuses on the mechanism of how it is produced and how it bursts out, and then analysis the cause of real estate bubble in China from three aspects. Finally, we get some constructive ideas for Chinese real estate industry from the lessons abroad.