Risk Logic and Policy Enlightenment of Real Estate Bubble and Financial Crisis

With the rapid growth of economy, residents’ demand for real estate is not only limited to residential function, but also as an important investment product to buy. Therefore, under the joint action of these two demands, the real estate prices in China have increased rapidly. At present, the predicament of the real estate industry, especially the fluctuation of house prices, can easily cause the illusion that the real estate bubble is squeezed out or reduced, thus neglecting to guard against it and causing great disaster. Both the expansion and bursting of bubbles will lead to wealth transfer and social stratification, and the resulting political risks are more likely to lead to market panic or even financial crisis than financial risks. This paper analyzes the relationship between China’s real estate industry and financial industry, and then puts forward some policy suggestions to prevent the financial crisis caused by the real estate bubble in China.