The influence of real estate bubble on ordinary people

The bursting of the real estate bubble is often accompanied by economic depression, stock price decline, and the financial operation of enterprises is gradually in trouble. The falling stock price makes a large number of convertible company warrants issued by enterprises unable to be converted into equity for a long time, thus bringing huge debt repayment burden to enterprises; In addition, the decline in land prices and stock prices has also caused enterprises to suffer huge asset evaluation losses and sales losses of forced sale of land and stocks. The decrease of enterprise income makes the investment insufficient, which not only reduces the investment level of research and development, but also reduces the investment of enterprises in equipment. During the period of 1992, the R&D expenditure of Japanese manufacturing industry decreased by 3.5%. Taking this crisis as an opportunity, Japan gradually lost its advantages in the fields of automobiles and semiconductors. The decline of production leads to the deterioration of employment environment and the decline of residents' real income. According to Thai official statistics, from June 1998 to July 1, there were 5,377 bankrupt enterprises and 6,538 enterprises that stopped production. By the end of 1997, the number of unemployed people reached120,000, and 1998 increased to 2 million.

(b) consumption has fallen sharply.

Case et al. (200 1) and others pointed out that the change of real estate price has far greater influence on consumption than stocks. According to Hong Kong's experience, when property prices fall sharply, a large number of negative assets are created, and real estate transactions are greatly reduced, which will greatly affect the business of construction, engineering, bank mortgage and law firms, and eventually the impact will extend to high-end consumer markets and other industries. In addition, the decline in land prices devalues the land assets owned by individual residents. Due to the economic depression and the decline of personal income level, residents are worried about the future to varying degrees, so they will reduce their current consumption and expand the savings part of their income. In an emergency, according to the experience of the United States, the decline of the real estate industry has reduced the economic growth rate by at least 2 percentage points.

(C) economic growth decline

The shrinking of personal consumption has put many industrial sectors that produce consumer goods in trouble. Leading to a large number of business closures and layoffs. Figure 1 shows the unemployment rate and underemployment rate in Hong Kong from 1982 to 2006, rising from 1998 and declining in 2004. Business failures and layoffs mean a large number of unemployed employees, even if there are no closed businesses. Due to the decline in income, we must continue to lay off employees.