China’s Real-Estate Bubble Essay

The housing crisis of 2008 can trace its origins back to the stock market trends of the mid- to late 90 's. During a period of extended growth in the stock market, increased individual wealth among investors led to generalized increases in spending, including in the housing market. With more disposable income in the pockets of consumers, the demand for housing increased in the late 90 's. Due to the fact that homes are large projects and their construction takes a large amount of time, the supply of homes in the market is inelastic on the short term. Because of the fixed supply of homes, as per the law of supply, which

The rising of house prices in Canada is like the train which has gone off the rails. In Vancouver – the average home price has jumped almost 40 percent in 5 years (Dmitrieva, Apr 14, 2016), more to the point, houses which are purchased but uninhabited are increasing in Canada; because many rich foreigners try to make a profit from reselling house, but foreign buyers are nor the only reason for real estate problems in Canada. The real estate market’s regulation is ineffective and low interest rates of mortgage are the main causes of the housing market bubble in Canada. The overheating of real estate can be moderated by the practical regulation and effective forecasts from more datas.

The last housing crash was devastating to the global financial community. Considering the current trends in the housing market, are we becoming more at risk for another housing bubble? The experts continue to debate this contentious question.

It is believed by many and known by some that the historical damage in the crisis of 2008, called the “financial crisis” was pushed by the housing bubble. The recent crisis was the biggest horror around the world since the Great Depression. Prices of houses were rising since the year of 1999 and then rose by 6% and continued at a

Globalization is an important term that is partially responsible for an economic revolution that took place around the world. Theodore Levitt, a former Harvard Business Review editor, coined the term “globalization” and used it for the first time in one of his articles in 1983 (Los Angeles Times magazine, 2006). According to the Business Dictionary, globalization can be defined as “the worldwide movement toward economic, financial, trade, and communications integration” (businessdictonary.com). China can be considered as an excellent example to demonstrate globalization. When Deng Xiaoping was elected as the Communist Party leader, he brought about economic reforms that opened the Chinese economy to the rest of the world and later introduced itself into the World Trade Organization (WTO) in 2001 (bbc.co.uk, 2006). Hence, expanding the growth rate of the Chinese economy, which has been constantly rising over the past decade. As of 2016, China is the second largest economy in the world with a GDP of $12.9 billion USD, and will continue to grow following the trail the United States (money.cnn.com, 2016). The emergence of China and its success as a powerful economy in the world can be partially credited to globalization. The following paper focuses on both the positive and negative ways in which China has been affected by globalization and its outcome that has placed China to where it is today.

Over the past decade, the media and the number of well-known press constantly claim that the prices of house in US is realistically the best evidence of the existence of an asset price bubble in the housing market during the early 2000s. The first effort here we can look at is a survey by McCarthy and Peach (2004) which shows that the level of home prices relative to household income and the level of home prices relative to rent are commonly used to support claims of an asset price bubble. On the other hand, Holcombe and Powell (2009) listed 3 basic views as opposed to the existence of house price “bubbles”: the first one claimed that the existence of “bubbles” is expectedly the results of “real”

Therefore, one can notice that there are varied opinions and views amongst economists regarding the causes of the housing bubble in USA and thus it becomes imperative to analyse those opinions further in order to arrive at the most important cause (or causes) behind the U.S housing bubble. So, in my research, I am going to investigate these causes extensively and put forward my analysis about how this housing bubble was created, how it increased to unsustainable levels, the effects of the bursting of this bubble and finally if and how it could have been avoided.

Although the housing price is incredibly high in China today, the demands for housing are kept increasing, which is another reason lead to high housing price. The average Chinese city dweller takes their first mortgage at the age of 27, far earlier than in other countries. Why do young urban Chinese are buying first-home so early? First, concerns over future increases in house prices were driving them to buy their first homes “too soon” (Boehler, 2013). Second, the traditional pressure on young urban Chinese to own

For millions of people in the United States, the property boom of the 2000’s ended without much warning. All over the country, tent cities are emerging as the abode of those most unprepared for the collapse of housing prices and the resulting decrease in employment opportunities. The housing crisis’ effect on national economies threatens to plunge the global economy into a malaise unseen since the 1930s, according to Alan Greenspan (former Federal Reserve Chairman), the International Monetary Fund, Warren Buffet, and a host of economists around the world. In the United States, financial and real estate sectors’ unethical behavior has done much to produce the crisis, and must be addressed for prosperity to be reestablished. In the spirit of

Real estate markets are closely related to macroeconomics, as was demonstrated by the global financial crisis of the late 2000s. The crisis originated in the real estate market when mortgage interest rates were low. The demand for real estate increased and banks offered risky subprime mortgages (Lopus, 2013). The financial crisis led to a debate across scholars on the macroeconomic factors that affected the development of the price bubble in real estate markets. On the one hand, irrational investors may determine the changes in real estate markets as suggested by Brunnermeier and Julliard (2008) and Case and Shiller (2003). On the other hand, Goodman and Thibodeau (2008) argued that fundamental macroeconomic factors determine the developments in real estate markets to the greatest extent. This research addresses this debate and explores the effects of macroeconomic environment on the real estate prices in the UK. The focus of the study is made on the determinants of regional real estate prices in the country.

The People 's Republic of China has had one of the wildest real estate sectors of any large-scale global economy. Chinese real estate value have been appreciating dramatically and at least abroad in the United States, media outlets have been covering this topic in an extremely sensationalistic way reporting "ghost cities," and "real-estate bubbles" at their bursting point.

The period since 2007 onwards has been an extremely challenging one at the global level, with parties across the globe facing the consequences of the economic crisis. In the second half of the 2007, the over inflated real estate bubble burst, impacting the credit market, banking and ultimately all sectors of the global economy. The culprits for the situation created are still analyzed and the complete solutions to revitalization have yet to be found.

With a population of 1.3 billion, China faces unprecedented urbanization challenges. The Chinese government, at various levels, strives to accelerate the urbanization process through city expansion and lowering the threshold for farmers to move into cities. Although urbanization is an inevitable consequence of modern economic development, this process has shown signs of "overheating." Hidden drawbacks, such as intensive pressures on employment and social security, and bubbles in the real estate industry, suggest that the government needs to put the brakes on this trend by carefully scrutinizing and taking steps to control the process.

The soaring property prices in China’s coastline and major cities such as Beijing, Shanghai, Shenzhen, and Dalian has formed the biggest bubbles in the real estate market in the decade. However, we do not see any slowdown in these cities. As of today, the property prices seem to keep on growing forever. Will China’s housing bubble pop?

Just a couple weeks ago, many cities in China have begun to loosen the restriction. In China, 2010, Chinese central government issued a housing restriction policy, which limited families’ purchase of housing and commercial loans for the real estate companies. It supposed to control the demand of the real estate, and lower the housing price. However, after following this policy for 4 years. The housing price still keeps growing. Many small real estate companies were heavily effect by this policy. Some of them had exited this market. However, the financial statements from several big real estate companies in China indicated that these companies were making more profit and experiencing