Using macroeconomic indices to explore housing price bubble

According to the previous literatures and news, the housing price in China has been increasing dramatically and resulted in some problems. This study estimate six regions’ housing price bubbles including Shanghai, Beijing, Guangzhou, Shenzhen, Chongqing and Wuhan. First, this study uses some basic analysis to explore the data such as, descriptive statistical analysis, correlation analysis, unit root test and Granger Causality test. Second, this research measures the impact of macroeconomic indicators on these six regions using State Space model, that is, whether these six regions have a housing price bubble or not. This study uses macroeconomic indicators to investigate Shanghai, Beijing, Guangzhou, Shenzhen, Chongqing and Wuhan housing price bubbles. Choosing six regions of China’s housing price index and nine independent variables from 2005 Q3 to 2016 Q4 in this research. First, this study separates each region with different macroeconomics indices to estimate the significant of the housing price. Second, through many tests and found out the best models with the housing price bubbles in six regions. This study concludes that there are various significant relationship evidences for each region and it has different variables affect the housing price. The results of State Space model show, Beijing and Guangzhou suggest higher hosing price bubbles and need to strengthen control to avoid more housing bubbles