Land Finance Impact On Real Estate Prices

Recently,China’s real estate prices rose year by year,while local governments more and more rely on land finance. Housing has become the rigid demand of the process of urbanization,therefore, whether the rose of housing prices is related to local government finances depending on land, and how much connection between them,caused widespread concern in the academic community and the public.After the tax reform,local government shifts the financial power and devolves the liability powers,resulted it turned to negative from positive and began to shift its focus to seek extra budgetary funding as new growth,coupled with the shift of national focus since the beginning of reform and opening in the1980s’,the so-called "GDP performance concept" started to appear, with GDP-based view and the limit of the term of office local government officials made pursuing the high growth of GDP as their targets and incentive to work,which led that local government keens to approval and develop land,even crime for defying the central government’s policies and decrees. From the view of income sources, the main land of such funds is the income related to land development and transfer, which is commonly known as the "land finance".By using a variety of research methods such as theoretical anglicizing, building econometric models,and establishing game model this paper tries to analyze whether local government’dependency on finances will lead to real estate land prices, as well as how much of an impact on it.Full text tries to answer the following four questions.(1) the definition, composition, causes and status analysis of land finance.(2) through building panel data regression mode to analyze whether local government’s dependency on land has positive correlation relationship with the rose of housing prices, and degree of the correlation between them.(3) by building the game model to analyze whether local government has opportunistic attitude to risk being punished by central government, and ignores the diseconomy results of external behavior, making the short-term reckless opportunism behavior as "Banded","dry Ze and fishing,"(4) making the corresponding policy recommendations based on the problems achieved by this paper.