Empirical Study On The Interation Of Land Finance, Local Expenditure And Real Estate Price

In recent years, the real estate market has a great prosperity in our country with therapid economic development.The government gets huge financial income from land-related taxes and introduces a series of preferential policies which indirectly contribute tothe further expansion of the real estate investment market. Since the dramatic increase indemand for house, the real estate also has rapid rise in some cities which has relativelydeveloped economy and high level of public services.This study analyzes the impacts ofland finance and local public expenditure on real estate price from qualitative andquantitative view by using panel data analysis. It also makes an analysis and briefcomment on the results and reasons from the national and regional levels in the empiricalpart. Finally, the study put forward policy recommendations in order to promote thehealthy development of real estate industry.First of all, the article introduces the concept of land finance and analyzes thefour-quadrant model between land prices and housing prices and real estate taxcapitalization model. Then it elaborates the Tiebout model and extension study of Tieboutmodel by Oates and Hamilton. Basing on this model, it deduces the process ofcapitalization of public goods.Secondly, the article shows the basic status of the real estate price, land finance andlocal public expenditure, founding that real estate prices, land income, land-related taxesand local public expenditures are rising steadily and there are regional differences. Itdescribes the fluctuation characteristics of land finance, public spending and the realestate prices，proving a positive relationship with the house prices.Thirdly, the study constructs a panel data by using30provincial panel data from2002to2012and discusses the influence of land income and local public spending on houseprices from the national and regional aspects. Land income and local public spending arealways positively correlated with housing prices, while land-related taxes has a negativecorrelation with the real estate price.Finally, according to the empirical results, the article proposes reasonable and feasible policy recommendations combining with the current situation of the real estate andeconomy in China.