The Study On The Irrational Fluctuation Of The House Price In China

Since the second half year of 2003, the continuous rising of the real estate prices has been paid much more universal attention in China. This article tries through the empirical study analysis method to study the house price fluctuation in China. The real estate possesses double property of consumption and investment, so the price of it consists of two parts. One part is certain, which can be reflected by the present discounted value based on the rental and the other part is uncertain, which can be reflected by the option value of the real estate. In the article, I dare to use the Black-Schole's Option Pricing Model to measure the option value of the real estate, and determine the expected house price rising rate when things are balanced, then define the rational fluctuation and the irrational fluctuation of the house price.China's house price fluctuation features are different in the different areas because of the unbalanced development of the real estate market. Therefore we should not only study the house price fluctuation of the whole country, but also need to study that of the different areas.I firstly study the house prices of the whole country, and then single the house prices of Shanghai as an example. In the selected period, we have found that the fluctuation features of the whole country and Shanghai have something in common. They both show the features of irrational fluctuation from 2003.But when studying more deeply, we can easily find the difference between them, and the reasons cause them are not identical. After making an in-depth analysis, we finally draw a conclusion that the irrational fluctuation of the whole country is caused both by the consumption demand and the investment demand, but the irrational fluctuation of the Shanghai city is caused only by the investment demand.