Political Economics Analysis Of The Real Estate Bubble

Living is the most basic human need, and also is one overall performance of the socialdevelopment level. Real estate is an important material basis for people and one of theelements for social development. In recent years, China’s real estate prices continued torise, which seriously affected the healthy development of the socio-economic impact on thepeople’s living. In this paper, we use the theories and views of political economy to analyzeand research on a number of issues in the real estate bubble in China.First, the definition and value composition of the real estate was described.Subsequently, the formation conditions, mechanism and cause of real estate bubble wereanalyzed from the perspective of political economy. On this basis, the recognition, test andhazard of the real estate bubble were also researched. Also the relationships between theinterests of economic entities in China’s real estate industry were analyzed. The author alsoprovided a number of recommendations to eliminate the real estate bubble in China fromthe perspective of the government, financial institutions, etc.The main ideas and conclusions of this study are the following:(1)The value of real estate is composed of constant capital, variable capital, andprofits. The theoretical value of real estate is the basis of the cost of production plus theaverage profit of the community, instead of the average profit in the real estate industry.(2)The real estate bubble formation conditions including the scarcity of real estateresources, real estate’s future income and an active real estate market. The prices, costs,policies, the level of consumption and other factors would affect the formation process ofbubble.(3) The economic entities of the real estate industry is extremely complex, and alsohinder the solution to the problem of the real estate bubble.