Paper Infomation
Virtualization of Real Estate Industry and Housing Bubbles——Empirical Evidence from China
Full Text(PDF, 43KB)
Author: Beibei Yan, Yizhen Wang
Abstract: In the last twenty years, China has experienced a rapid development in the real estate industry. The continuous rising house price causes many social and economic problems and draws a lot of attentions from academia, business world and government. Many researchers shed light on this problem from different angles, but till today, it hasn’t been fully resolved. In this paper, we try to examine the real estate bubble from a virtual economic perspective. We think that the virtual feature of real estate alters its economic role from a purely living and working place to a financing instrument. We use the newest monthly data of China real estate market from 2006 to 2018 and estimate the relationship between the housing bubble and real estate industry virtualization. We identify a significant positive association between house price index and the purchase price of land in real estate investment. This result suggests that virtual feature of real estate has deepen the bubble problem in the industry and its virtualization degree appears to be closely related to the virtual feature of land and its price proportion to real estate investment.
Keywords: Real Estate Bubbles , Virtual Economy, China Housing
References:
[1] Wang Tianyu. “Research on Regional Difference of Real Estate Price Bubble—Macro Data from 31 Interprovincial Units in China.” Review of Investment Studies, 2018(37):26-51.
[2] Shanghai Bureau of Statistics, http://www.stats-sh.gov.cn/
[3] Wang Zihe. “An Empirical Study on Real Estate Foam in Wuhan—Based on Data of Real Estate Industry in Wuhan from 2011 to 2016.” Accounting Learning, 2018(2):187-188.
[4] Wang Jun and Yu Fuhai. “The Virtual Nature of Real Estate and the Real Estate Bubble problem.” Economic & Trade Update, 2008, 6(12):17-19.
[5] Liu Peigang. “The Relationship Between Virtual Economy and Real Estate Bubble—How to Restrain the Real Estate Bubble.” Modern Finance & Economics, 2009(4):9-12.
[6] Li Ping. “A Study on the Measurement of Real Estate Bubble in China.” Statistics & Decision, 2007(24):82-85.
[7] Zhou Jianjun and Ju Fang. “A Binary Analysis Framework of Real Estate Bubble—Reflections on the Dichotomous Method of Real and Virtual Economy.” Contemporary Finance & Economics, 2008(5):85-89.
[8] Wang Quanmin. Real estate economics, Northeast University of Finance and Economics press, 2002.
[9] Qiao Bingya. “Re-understanding the Asian Economic and Financial crisis under Global Economic Integration.” Financial Theory & Practice, 1998(5):13-14.
[10] Minsky H. P. “The Financial Instability Hypothesis: Capitalist Processes and the Behavior of the Economy.” 1979, Hyman P. Minsky Archive. 471. https://digitalcommons.bard.edu/hm_archive/471
[11] Cao Zhenliang and Fu Shihe. “Real Estate Bubble and Its Prevention” China Real Estate, 2000(2):7-11.
[12] Wang Ziming. “Bubbles and Bubble economy: Disequilibrium Analysis.” Beijing University Press, 2002.
[13] Tirole J. “Asset Bubbles and Overlapping Generations.” Econometrica, 1985, 53(5):1071-1100.
[14] Abraham J. M. and Hendershott P. H. “Patterns and Determinants of Metropolitan House Prices, 1977-91.” National Bureau of Economic Research, Inc, 2006:18-56.
[15] Case K. E. and Shiller R. J. “Is There a Bubble in the Housing Market?” Conference of the Brookings Papers on Economic Activity, 2003, 34(2):299-362.
[16] Yuan Zhigang and Fan Xiaoyan. “Analysis of Rational Bubble in Real Estate Market.” Economic Research Journal, 2003(3):34-43.
[17] Li Mengxuan and Cao Yang. “Measurement and Cause Analysis of Real Estate Market Bubble in China—From the Perspective of Behavioral Finance Theory.” Macroeconomics, 2013(9):86-91.
[18] Zhao Wen. “An Analysis of the Bubble Phenomenon in China's Real Estate Market.” Nankai Economic Studies, 2003(2):60-62.
[19] Zhou Jingkui. “Information Asymmetry, Belief and Excessive Financial Support—A Game Theory Analysis of the Formation of Real Estate Bubble.” Finance & Trade Economics, 2005(8):3-9.
[20] William Leatham. Letters on the Currency, London: Pelham Richardson, Cornhill, 1840．
[21] Allen F. and Gale D. “Bubbles and Crises.” Economic Journal, 2000, 110(460):236-255.
[22] Bhaduri A., Laski K. and Riese M.. “A Model of Interaction Between the Virtual and The Real Economy.” Metroeconomica, 2006, 57(3):412–427.
[23] Liu Junmin and Guo Jinxing. “Research on Virtual Assets Characteristics of Real Estate.” Nankai Economic Studies, 2004．
[24] Yu Kai. “A study on the Virtual Nature of Real Estate.” Journal of Guangxi University (Philosophy and Social Science), 2008, 30(6):26-32.
[25] Ju Fang and Ouyang Lipeng. “A Study on the Influencing Factors and Rationality of Real Estate Price in China.” The Theory and Practice of Finance and Economics, 2008, 29(4):116-119.
[26] Haurin D. R. “Income Variability, Homeownership, and Housing Demand.” Journal of Housing Economics, 1991, 1(1):60-74.
[27] Quigley J. M. “Real Estate Prices and Economic Cycles.” Berkeley Program on Housing & Urban Policy, 2002, 2(1):1-20.
[28] Jud G. D. and Dan T. W. “The Dynamics of Metropolitan Housing Prices.” Journal of Real Estate Research, 2002, 23(23):29-46.
[29] Li Wenhu. “Influential Factors of Real Estate Virtualization Based on Structural Equation Model.” Harbin Institute of Technology, 2010.
[30] Omura Yoshihiko. Japan's Bubble economy and Financial Reform, China financial publishing house, 2000.
[31] Liu Junmin. From Virtual Capital to Virtual economy, Shandong people's Publishing House, 1998.
[32] Tang Xianbin and Zhang Chen. “The Virtual Characteristics of Real Estate Market.” Securities & Futures of China, 2011(9):116-117.
[33] Song Youji. “Factor Analysis of Real Estate Bubble in Changsha City.” Rural Economy and Science-Technology, 2018, 437(09):219-222.
[34] Gottlieb M. “Long Swings in Urban Development.” National Bureau of Economic Research, 1976:11-14．
[35] Mankiw N.G. and Weil D.N., “The Baby Boom, the Baby Bust and the Housing Market.” Regional Science and Urban Economics, 1989, 19:235-258．
[36] Potepan M. J. “Explaining Intermetropolitan Variation in Housing Prices, Rents and Land Prices.” Real Estate Economics, 1996:45-52
[37] Shen Yue and Liu Hongyu. “Housing Price and Economic Fundamentals: an Empirical Study on 14 Cities in China 1995-2002.” Economic Research Journal, 2004(6):78-86.
[38] Ju Fang. “Comprehensive Judgment on Real Estate Bubble in China.” Social Scientist, 2007(3):63-68.