The Research on Measuring Method of Real Estate Bubble

Recently, because of the rapid development of Chinese real estate industry, the problem of the existence of real estate bubble attracts more attention of the society than ever. In fact the essence of the existence of Chinese real estate bubble struggle is the interest struggle of different interest groups. When Chinese real estate bubble emerges and bursts at last, it will bring serious result to the whole economy and society. The bubble has been one important restricting factor of the healthy and steady development of Chinese real estate industry. Thus it is necessary to have a widely recognized and practical testing and measuring method of real estate bubble to judge the existence of bubble. But after analysis and comparing of many testing and measuring methods of real estate bubble, the author find that they only could test whether bubble exists or not but could not measure the size of it. So, this paper through the rational stock bubble model which put forward by American famous economist Blanchard and Wosoton in 1982 establishes the testing and measuring model of real estate bubble to cover above disadvantages. The formulation of real estate bubble model is simple as compared with other methods and the data needed in model can be acquired easily. Moreover the model is highly adaptive and expansible. At last we make empirical research into real estate industry of several big cities with the conclusion that the degree of the bubble in Shenzhen housing residences is the largest about 102.8% and the average degree of the bubble in housing residences reaches 34.4%, which illustrates clearly that not only there is bubble but also it is very big now in Chinese real estate market. The measuring model lays the foundation for the construction of early-warning system and provides reference for the government decision