李娟+喻丹琳+伍中拉

1.measurement index

Based on under below measurement index， Chinas real estate industry has reached a property bubble which is about to burst.

Its estimated that approximately the entire sale price of lands in Beijing， Shanghai and Shenzhen equals half of United States. 2 out of 10 of the world's least affordable markets are now in China. However， ironically the average per capita income of China is far below that of developed countries， with a poorer environment.

As to the house price-income ratio， 3-6 times of income is within normal levels， while Shenzhen marks 28 times， followed 21 times for Shanghai and 18 times for Beijing. The national average is about 8 times. However， compared with the peak times of Japans property bubble， the housing price is no more than 9 times.

2. Causes analysis

The essence of real estate market game is the land policy game. We know that The Communist Party of China takes control of all the construction lands， which means the government can manipulate house prices as well as house supply. In this case， the main reason for producing all the bubbles should be the government regulations.

Land-transferring fee is one of the main sources of local government income ， since 2013， total income of land， real estate and construction has reached the amount of 6.6 billion RMB， and among the huge figure， over 4.1billion RMB is the income of land-transferring fee. Most of the income has flown into the governments pocket and has made up over half of the local finance.

On the other hand， because of the extensive economic growth mode made by the central government， some local government officers enhance home price with purpose. Because the bubbles can drive GDP index to a high mark which is exactly what we are struggling for several years ago. So if we put ourselves into the governments shoes， its easy to understand that these officers are not so willing to break the bubbles by themselves.

The narrow investment channel is another concern behind the bubble. Stock market is very popular with high payback and high risk. But the system of stock market in China is incomplete and very immature. Wise investors have lost their confidence in stocks， so the home investment becomes a good choice for its safety and high return.

3. The Chongqing model------a successful example

During Chinas national day holiday earlier this month （Oct. 2016）， more than 20 local governments rushed out new measures in an effort to curb rising property price. No such efforts were needed in Chongqing， chinas largest urban center which is home to 30 million people. Property price in the giant municipality on the Yangtze River in south-western china have increased only 12% in the last five years despite the economy growing at double digit rates for more than a decade.

3.1 Household registration system reform

In September 2015 the city announced that it would provide people living in rural areas with the same welfare benefits and social services as urban residents. Those employed in the main city area for more than five years or in suburbs or counties for more than three years were entitled to be urban residents. Some 3 million people are enjoying the new benefits. Chongqings urbanization ratio reached 60.9% in 2015， up from 43.5% 10 years ago and ahead of the national level of 56.1%.

3.2 Land reform to give villagers better compensation for land sales

One reason why the property market has been so stable is the ample supply of land （20，000 hectares reserve）. This， in turn， has allowed the citys decade-old land ticket （dipiao） experiment to flourish. Farmers can sell the land ticket they get for their village land， receiving 85% of the sale price， with the remaining 15% going towards village management costs.

After nine years， the dipiao mechanism is benefiting all three parties： it provides funds for local governments to build infrastructure and provide public services； the property developers acquire land at a lower cost； the farmers who get better compensation for their land.

3.3 Public housing for migrant workers

Chongqing is the biggest municipality in China， with a population of 30.1m compared with Shanghais 24.2m and Beijings 21.7m； 18.4m live in urban areas. Housing demand goes hand in hand with the acceleration of urbanization， so in addition to a steady increase in land supply， Chongqing has set up a two-tier housing supply system to meet different housing needs. It works like this：

（1） The government provides land and subsidies for public housing， aiming to cover the more disadvantaged parts of the population， including college graduate students， migrant workers and poorer households with per capita housing area less than 15 square meters.

（2） The city has steadily increased the commercial housing supply to meet the needs of the other 60-70% of the population.

4. Conclusion

Property bubble is inevitable in the course of a nations economic development. Chinas property bubble today is comparable to Japans in the late 1990s. Destructive impact that property bubble burst exerts can be avoided with effective measures. Many successful countries and regions have been seen less property bubble and higher economic growth with policies adapted to local conditions， Chongqing can be an example. Government should take measures immediately to calm down Chinese heating property market， or the country will confront bubble burst.