This study predicted crises expressed as a surge in housing price in Chinese housing market using Probit Model among EWS methods, and analyzed influence on crises of policy variables through the prediction. Prior to full-blown empirical analysis, it reviewed over housing policies announced and being still supplemented by considering the process of the formation of Chinese housing market. Through this, it found out that the housing market in China is greatly influenced by government policies rather than moved by the economic mechanism. Partially, it considered variables that would affect crises of Chinese housing market based upon Probit Model, one of EWS methods and built an early warning system for the housing market. And then, through in-sample & out-of sample prediction, predictability on possible crisis occurrence within a year was verified. As a result, in-sample predictions showed 6 prediction fallacies out of a total of 43 predictions, whose valid predictability reached 86% while out-of-sample prediction showed 2 prediction fallacies out of a total of 6 predictions, whose valid predictability reached 80%. After that, it built an early warning system using only policy variables based upon Probit Model and conducted in-sample & out-of-sample prediction experiments. As a result, in-sample predictions showed 10 prediction fallacies out of a total of 43 predictions, whose valid predictability reached 76.7% while out-of-sample prediction showed only 1 prediction fallacy out of a total of 10 predictions, whose valid predictability reached 90%. Both of the two early warning systems showed considerably high predictability in in-sample & out-of-sample predictions. In-sample predictions showed higher predictability in a model considering variables other than policy variables while out-of-sample predictions showed valid predictability, 80% & 90% in both models respectively, but it’s hard to say that statistically significant difference was found. It’s hard, however, to confirm that effective early prediction is possible using Chinese housing market early warning systems built on the basis of only the results verified by this thesis or that price surges in Chinese housing market can be predicted.
