Housing Bubbles

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Mar 26, 2019 11:02
Thanks to Stinky Tofo (臭豆腐), I realized I didn't quite understand the concept of housing bubble. Therefore, I opened google and typed in the key word - housing bubble. For somebody like me who has no previous knowledge of this type of economic terms, I found it hard to comprehend.

According to Wikipedia, the concept of housing bubble consist of two phrases. First there is a period where house prices increase dramatically, driven more and more by speculation. In the second phase, house prices fall dramatically. Housing bubbles tend to be among the asset bubbles with the largest effect on the real economy, because they are credit-fueled, because a large number of households participate and not just investors, and because the wealth effect from housing tends to be larger than for other types of financial assets.

What does it mean by credit-fueled? And why does it have to do with housing bubbles? This is what confuses me.

When Chinese people invest in real state, we call it 炒房 which is a type of speculation. With more people buying houses without actually using them, the housing price goes up. So what is gonna bring the price down?
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