An Empirical Study of China's Real Estate Cycle Based on Investmest and Area

In China, the real estate industry has developed to be an essential part of the national economy. Healthy development of the real estate industry means a lot to the development of national economy. So, the study on real estate industry becomes particularly important. Just like the development of other industries, the real estate industry shows the cyclical fluctuation in the course of development, whether in mature real estate market abroad or in the domestic market which is still in the beginning phase. Researching on the laws of the real estate industry cycles and understanding the characteristics of the real estate industry are vital to state management to formulate industry regulations and policies on the real estate. And they also play an important role in the investment decision-making for investors. This article collects three indictors; they are annual investment, annual construction area, and annual sales area. The time period of the data is from 1988 to 2007, spanning over a period of 20 years. Based on the data and three indictors, the article uses the residual method to analyze the cyclical fluctuation of investment link, construction link and sales link, which are necessary links in the process of real estate operation, in order to decompose the regular pattern of the real estate industry. Through a series of analyses, the paper draws a conclusion. In view of the fluctuations of annual investment, the real estate industry has not experienced a cycle yet. In view of the fluctuations of annual construction area, the real estate industry has gone through a complete cycle, and the interval is 12 years; In view of the fluctuations of annual sales area, there is a 7-year interval between the trough and the trough, a 12-year interval between the peak and the peak. Three links don't have a coincidence point at the same time. On the whole, the periodicity of China's real estate industry is not obvious in the time period chosen by the paper, because the real estate industry in China is still in the infancy stage of development and has not matured yet.