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Housing price bubbles in Beijing and Shanghai? A multi‐indicator analysis

Yongzhou Hou (Royal Institute of Technology, Beijing Normal University, Beijing, China)

International Journal of Housing Markets and Analysis

ISSN: 1753-8270

Article publication date: 9 March 2010




Beijing and Shanghai have been the leading housing markets in urban China. In the late half of the 2000s, both metropolises experienced a pronounced process of housing price appreciation. The purpose of this paper is to examine whether there exist housing price bubbles in the two largest cities in China.


The study is based on a combination of different quantitative indicators: a comparison of housing market prices with the rational expectation price, mortgage loans, and the ratios of price to income and to rent. Moreover, the statistical tool of control chart is introduced to quantify housing bubbles.


The study shows that Beijing appears to have been on the way of forming a housing price bubble between 2005 and 2008, and that there perhaps existed a housing bubble in Shanghai from 2003 to 2004. It appears that the housing market cycle in Beijing may be divided into three stages: the cycle peak stage (1991‐1997), the cycle trough stage (1998‐2003) and the second cycle peak stage (2004‐2008).


In an attempt to explain the possible existence of housing bubbles in Beijing and Shanghai, this paper uses an integrated strategy involved with such fundamentals as interest rates, rent, income and GDP. In particular, the control chart, based on per capita GDP, is introduced to identify a housing bubble.



Hou, Y. (2010), "Housing price bubbles in Beijing and Shanghai? A multi‐indicator analysis", International Journal of Housing Markets and Analysis, Vol. 3 No. 1, pp. 17-37.



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