The Causes of Real Estate Bubble in China
With the rapid development of China’s economy, the real estate becomes more and more important because of ids significance of being on of the main industries in China. Recent years have witnessed the fast development of the real estate industry. As we all know, a qualified real estate market needs a balance between supply and demand as well as a moderate increase in price. In some fast developing countries, real estate bubble is a kind of economic phenomenon that is easy to occur. Chinese real estate industry has already stepped into the fast development time, therefore fighting against the real estate bubble is of great significance.
Some people argue that house prices will continue to increase because of real estate bubble, while others firmly believe that the real estate bubble does not exist. I am in favor of the former one. As far as I am concerned, the economic boos in China have many relations with the real estate bubble. Also there are so many social and economic reasons for this phenomenon. Firstly, the limit of land resources are is one of the factors contributing to the production of the bubble. The supply and demand are two foundation factors in the development of economy. The scarce supply will surely limit the development, increase the market price and then result in real estate bubble. Secondly, the great demand of houses is also the main cause of the real estate bubble. This is also controlled by the relationship between supply and demand in market. Thirdly, some companies and agencies raise the prices artificially. Then the economic boom came into being. All of the above factors contribute to the real estate bubble.
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