Can Property Tax Reform Impact House Prices?

Since the real estate industry preceded the market-oriented reform in 1998,the rapid development of the real estate industry makes it become one of the driving forces to economic growth in China.However the problems behind the rapid development of the industry become more and more serious.The fluctuations in house prices gradually become incompatible with macroeconomic changes,leading the national and regional house price income ratio to stay in danger level.To guarantee the real estate industry healthy development,the government tried many policies.Gradually,it finds that it is important for the future development of real estate market to establish long-term regulation systems.Therefore the property tax reform starts to draw attention as it has long-term effects.Therefore the researches about the effects of the property tax reform on house prices continually increase,but because of the lack of household property tax data,the conclusions of the related empirical researches may have deviations.In order to overcome this data problem,we adopt the DSGE model to simulate the regulation efficiency of the reform on the house prices.Meanwhile we analyze the effects that the reform exerts on the macro economy,so we can know the economic effects of the property tax reform comprehensively.And it is more important in the context that Chinese economy is going through a transitional development period,because in this context every reform must balance possible negative effects on the macro economy in this context.We also analyze the effects of different police combinations containing the property tax reform in order to offer some reform plans that can guarantee the economic growth.Through the simulation,we find that the property tax reform indeed has long-term effects on the house prices and the regulated effects will become greater along with the rate increasing.But,at the same time it also exerts negative effects on the macro economy.And through analyzing the different policy combination shocks,containing loose monetary policy and credit policy,we find that the combination of the property tax reform and the loose monetary policy not only keeps the long-term effects on the real estate market,but also hedges the short-term negative effects on the macro economy.And,finally,we use the DID model to analyze the effects of the property tax reform on house prices inShanghai,and the result further certificates the simulation result.