The Effects Of Real Estate Taxes On Housing Price

The past ten years have witnessed the fast-speed development of China’s real estate market. The development even once played the role of helping some regions’ economy to develop. However, while it brings great advantages, the problems that come along with the rapid development of real estate industry cannot be avoided. For example, the development of such high prices in China, the existence of a bubble, and whether the real estate market is stable and sustainable. Hoping that the real estate market enjoys steady development, China promulgated a series of policy in order to suppress the excessive growth of house prices, promote social harmony and stability. And housing property tax is just one of them.This paper mainly analysis how the property tax can effect on prices. The study starts from the status quo of China’s real estate market, the characteristics of China’s real estate market, real estate tax policy review. And then the paper goes to the comparison of Shanghai and Chongqing, to evaluate the two cities’ property tax policies.After doing all those, there comes the main part of the paper, the theoretical analysis and empirical analysis of impact of property tax on housing prices. When it comes to the theoretical analysis part, the idea of capital pricing plays an important role, In this idea house property will be treated as ordinary asset, calculated as the future earnings discounted to now. And then through the tax shifting theory the paper got the conclusion that due to the different elasticity of property tax in different regions, the effect of property tax on house prices will also be different. So after all the analysis, three propositions are obtained, that the property tax do has effect on house prices, the tax has the inhibitory effect on house prices, as well as the influence of different areas of property tax on housing prices might be a different situation,In the part of empirical analysis the paper tries to respectively verify the three propositions. The first step is to use Grainger causality test to prove that the property tax is reason of the house price. Then divide the property taxes to two parts, holding part property tax and transaction part property tax. With panel data of30provinces of our country (city), the paper concluded some results, namely the two parts of property will all low the price of house. Finally then divide our country into three parts, East, West, and the middle area. In the three parts, the paper concluded that the different regional real estate taxes affect the house price differently. The three propositions are verified one by one.Finally, after the above theoretical and empirical research, we make corresponding policy suggestions in view of the current situation of our country.