Dissertation - Analysis of Speculative Bubbles within the Chinese Real Estate Market: MSc Real Estate Investment and Finance Dissertation

The real estate industry has a close relationship with the national economy. As a pillar industry, it effectively stimulates other industry growth and has accelerated housing demand in China notably over the past decade. However, due to multiple factors, the creation of a bubble economy is inevitable within the real estate industry. For example, factors could be the rapid growth of investment portfolios and the increase in residential property price, or an imbalance between market supply and demand which results in the disproportionate structure of the real estate market.“the basic intuition is if the reason that the price is high today is only because investors believe that the selling price will be high tomorrow-when ‘fundamental’ factors do not seem to justify such a price-then a bubble exists” (Stiglitz, 1990).This dissertation aims to; (1) Analyse the generation mechanism and driving forces of real estate bubble, (2) Find the degree of the speculative bubble in Chinese market, (3) Investigate the bubble in residential market in Shenzhen, and (4) Obtain the useful suggestions that can be used for the speculative bubble regulation and control.