An Empirical Analysis on the Real Estate Bubble in China

Accompany with housing system reform, real estate industry has been developing rapidly since 1997. One of the most significant phenomena is that housing price is flying up constantly. In some big cities such as Shanghai, Beijing etc. housing price even shoot 30,000 RMB per square meter. It difficult to believe that demand inelasticity push housing price so high considering purchasing power of our residents. Therefore, the authors try to use efficacy coefficient method to test whether housing price normal or not. By empirical analysis we find real estate bubbles are exiting during 2003 to 2007.