Housing Price Bubble: The Case of Beijing

Beijing’s real estate market, a key part of China’s economy, plays a crucial role in the nation’s development. Any downturn or collapse in housing prices in the city would have severe consequences for both the real estate sector and the broader economy. This paper aims to explore whether a housing price bubble existed in Beijing from 2014 to 2024. This study investigates the areas where these price bubbles are mainly concentrated, analyzing various indicators, such as the house price-to-income ratio, house price-to-rent ratio, and control charts. This study employs the rational expectations model to measure potential price bubbles, integrating these indicators to assess housing price volatility. The findings indicate clear signs of a housing price bubble in 2016 and 2017. From the perspective of Beijing’s districts, Huairou, Pinggu, and Miyun exhibited clear signs of housing price bubbles, while Changping, Shunyi, and Chaoyang displayed comparatively minimal housing price bubbles. This study utilizes nearly a decade of fresh district-level data to study housing price bubbles in Beijing, which contributes to the exploration of the risks associated with Beijing’s real estate market.