Impact Study Of The Real Estate Price Fluctuations On The Local Financial Revenue

In the last few years, the real estate industry developed so fast that it plays a more important role in the local economy. In the meantime, some problems occurred such as the excessive increasing of real estate investment, over speed of real estate price rising and imbalance of industrial structure, especially the abnormal soaring of the price. Therefore, there comes up a series of statement on the reason of the rising of real estate price, among which there are some arguments that attribute the rapid price rising to the local government intending to increase the local government revenues. However, how does the real estate price play a positive influence on the increasing of the local government revenues? And how should the local government deal with the tax revenues bringing by the development of the real estate industry rationally? There are still no comprehensive answers to these questions. In order to standardize and stabilize the development of real estate market and conquer the limit rational action of local government, it is very necessary to carry out a deep research on these questions.The main ideas and logical structure of this paper is: Firstly, this paper defines the relevant concepts of real estate and local fiscal revenues, and elaborates the affection mechanism of the fluctuation of real estate price on the local fiscal revenues. Secondly, this paper offers an easy analysis to the characters of real estate market and local fiscal revenues of Shanghai, and by selecting the historic statistical data about 19 districts and counties of Shanghai and different districts (including center districts, sub-center districts and suburban districts), and offers profound analysis to the findings. Finally, this paper summarizes and draws the conclusion.Based on our study on the effect of real estate price fluctuating plays on the local revenues, we finally get the following points: Firstly, the fluctuation of real estate price influences the local government fiscal revenues through affecting the development of the real estate developing, selling and leasing markets, and during the empirical analysis no all counties of Shanghai, it draws that the real estate price has a positive correction with local fiscal revenues changes in the same direction, namely, the rising of real estate price will increase the local fiscal revenues and contrarily, the falling of real estate price will decrease the local fiscal revenues. Secondly, due to differences of real estate price elasticity and dependence of local fiscal revenues on real estate industry, the degrees of influence that real estate fluctuation plays on local fiscal revenues are different among districts. The same fluctuating range of real estate price creates more influence on local fiscal revenues of sub-center districts than those of center and suburban districts. Finally, the local government should deal with the development of real estate rationally, should not depend on the positive effect brought by the real estate price rising. On the one hand, the contribution created by the rising of real estate price is just periodic. On the other hand, the rising of real estate price needs the supports of economic fundamentals. The local government's one-sided dependence on real estate industry will result in the lopsided industrial structure and the deviation of house prices from the economic fundamentals. Once the falling of house price happens, it will create a great impact on local economy and fiscal revenues. This paper also put forward three pieces of policy advice based on the whole analysis: Firstly, make sure the land supplying in a proper way and put the land price on a reasonable level; Secondly, change the housing supply structure and expand the house supply of middle-low price; Thirdly, regulate the order of real estate market and restrict the speculative activities of the real estate industry.