Abstract
The real estate market in China is often subject to government intervention while it is widely believed that speculation is one of the driving forces for the dramatic increase in house price. By controlling macroeconomic factors, we detect two types of speculative traders, fundamentalists and chartists, respectively. Fundamentalists rely on fundamental value for trading while chartists hold a momentum expectation. We further assess the effects of government intervention policies on house price and speculation. The tightening policy cools down while the stimulating policy enhances the speculation. The contrasting effects of different policies on speculations indicate the challenge in handling the Chinese housing market.
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