This paper examines whether noise traders generated by self-fulfilling mechanisms cause irrational price volatility. Because their self-fulfilling expectations are based on market sentiment, the regulators need to stabilize the prices through policy announcements or policy tools. This study analyzes noise tradersí self-fulfilling expectation in the Chinaís market where government strongly interfere. We find that asymmetric information may initiate noise traders into self-fulfilling expectation, and government is unsuccessful to control the house price shooting. We further consider the influence of market state switching. It finds that market presents evidence of self-fulfilling expectation, and also increased price volatility counteracts government intervention. Finally, other financial markets except stock are still ineffectiveness by controlling contagion effect.