Measuring Housing Bubbles In Major Chinese Cities:Theory And Evidence From Supply Side

For the past few years,the continuously rising housing prices in China's large and medium-sized cities,especially in the first and second tier cities,has aroused wide concern.The controversial issue is whether there are property bubbles in domestic housing market.With the Q-theory,this paper established a model of domestic housing market from the aspect of supply.What's more,the accumulated growth of housing bubbles is calculated using data of 35 major cities in China collected from January 2011 to December 2016.Furthermore,the paper analyzes the growing trend of the bubbles within the sample collectively and respectively,which lead to the following conclusions.First,Data shows the cumulative growth of the bubbles has been slowing down from 10% at the beginning of 2011 to-10% at the end of 2015,but it started to rise up to 5% in 2016,which showed the bubbles was shrinking firstly and then started to expand.Second,the comparison of the data of different cities showed that the bubble in 10 cities including Beijing and Shanghai expanded in an alarming rate,whereas 17 cities including Guangzhou and Shenzhen was shrinking,and bubbles of 8 cities remained stable.To sum up,35 cities investigated have housing bubbles and the bubbles some cities was growing too fast.To deal with this issue,this paper decomposes the cumulative growth of bubbles and analyses the factors affecting the average Q of the market and the marginal Q of the real estate development enterprise,and then works out how to decrease the bubbles.It is suggested that the investment scale of 19 cities including Beijing,Shenzhen and Guangzhou should be boosted.For the other 16 cities,the government should invigorate the current housing market and increase effective supply.It is hoped that this paper could be used as a reference for the structural reform of the supply side in domestic housing market.