(1). What's the essence of the real estate bubble?
Definition of the bubble in the real economics of the two real estate bubble, the generally accepted point of view of the famous American economist Charles P. Jindeboge, he believes the bubble is an asset or a series of asset prices in a a sharp rise in the continuous process, the initial prices gives rise to expectations that prices will rise further, thereby attracting new buyers. These people are generally based on the sale of assets of a profit-making speculators, and the ability to use and profitability of the assets not interested in that as prices rise, often to the expected reversal and prices plummeted, and finally ended in a financial crisis. "In his view, the real estate bubble may be understood in a continuous process for the real estate prices continued to rise such prices gives rise to expectations that prices will rise further, and continue to attract new buyers - With the rising prices and the continued increase of speculative capital, real estate prices far higher than the corresponding the real price, the resulting real estate bubble. The consequences of over-expansion of the bubble is expected reversal of the high vacancy rate and the price plummeted, the bubble burst, it is the nature of unsustainability.
(2).The causes of the real estate bubble.
a. Excessive speculation. On the one hand, land transactions, the system is not perfect, inadequate industrial management, to some extent, fueled the speculation, resulting in a large number of speculative bubbles. The other hand, the excessive growth of the real estate investment makes the growth rate of real estate investment far more than the city the speed of the process is likely to cause a serious imbalance of market supply and market demand, the housing vacancy rate, will cause real estate prices fell sharply, the bubble burst.
b. Consumers and investors' expectations of future prices. With the increase in population and urban development, land prices there is potential appreciation trend, real estate prices in the people's future expectations and will continue to rise. Caused investors to the idea of the future high-return real estate investment, real estate price of non-rational expectations, excessive monetary capital to the limited sale of land, to promote the rising of premium, so that real estate prices rising; the bubble burst, real estate prices, the prices of consumer expectations also fell, real estate agents have to sell its holdings of real estate, so increasing the supply of, and no one willing to take over buying leaving the reduced demand for, and thus exacerbated the prices.
c. Bank credit irrational expansion. As the real estate industry is capital-intensive industries, real estate development must have strong capital, with the constant expansion of real estate development, the developer of its own funds alone is not enough, developed the main source of funds is bank loans. High return on real estate, so that many banks in the actual operation of the loan, in violation of the relevant provisions of the payment of a large number of loans to developers, so that the barriers to entry reduced, resulting in over-development, financial risks continue to accumulate, so that the bubble may increased.
