Analysis of China's Real Estate Market Volatility and Financial Stability

Abstract

Fluctuations in China's real estate market profoundly affect the economy, the financial system and social stability. Effective policy regulation, including the adjustment of monetary policy and the control of speculative behavior, is essential to mitigate market volatility and reduce financial risks. This paper uses the historical data analysis method and literature research method to conduct research and analysis based on the study of the meaning of financial stability. Firstly, it divides the historical fluctuation of China's real estate market into four stages and explores the characteristics and causes of real estate price changes in each stage. Thus, the historical fluctuation pattern of China's real estate market and the mechanism by which real estate market fluctuations affect financial stability are derived. The mechanism by which real estate affects financial stability through the personal wealth channel, the balance sheet channel, and the liquidity channel is explored. The findings of this paper can provide a basis for government decision-making and guide real estate practitioners and investors to grasp market fluctuations and avoid potential risks.