Equilibrium Pricing of Real Estate: An Empirically Comparative Study

This paper takes property price excluding core CPI as the indicator of the bubble degree in the empirical study of American, Japanese and Korean real estate market and come to the conclusion that real estate bubble is at least dependent on income and credit. Furthermore, bank-dominated financial system fuels the housing price in both bubble booms and bursts. Actually, the effect of real estate bubbles is the reallocation of the economic value added among industries as housing bubbles will bring the society structural distortion, occupy social resources and wealth and finally curb the economy. Thus, it is necessary to establish timely and effective negative-feedback mechanisms and take the degree of asset bubbles into monitoring subjectives in order to avoid housing bubbles and the subsequent economic crisis. What´s more, investment structures should be adjusted timely to ensure balanced development of all the consumers and industries.