Specification of Housing Bubbles Based on Time-Varying Present Value Model: A Case of China

This paper studies fundamental housing values and housing bubbles based on Time-varying Present Value model. Using data of four typical cities in China, our results preclude the existence of housing bubbles in Tianjin and Chongqing. We further preclude the existence of explosive and intrinsic bubbles, but include that of momentum bubbles in Beijing and Shanghai, which accounts for 18.4% and 8.5% of housing price deviations from fundamental values respectively. Housing price monitoring should be strengthened, and consumer´s expectation towards housing prices should be properly guided in order to restrict market speculations in China.